Jane Street Under Fire: New Lawsuit and Federal Probe Calls Over Market Disruptions
Jane Street, a prominent global market-making firm, finds itself embroiled in controversy, facing a new federal lawsuit and calls for a federal investigation into alleged market manipulation and "naked short selling" within the cryptocurrency market. These allegations link the company to significant disruptions and questionable trading practices.
Federal Lawsuit Over Terra Collapse Allegations
The firm's legal troubles intensified with a lawsuit filed on February 23 in the U.S. District Court for the Southern District of New York. This suit accuses Jane Street of leveraging confidential information obtained from TerraForm Labs. The allegation states that the firm used this insider knowledge to shield itself from over $200 million in potential losses just before the Terra/Luna ecosystem famously unraveled in May 2022. Jane Street has vehemently refuted these claims, labeling the lawsuit as "desperate" and a "transparent attempt to extract money."
Bitcoin Manipulation and "Naked Short Selling" Claims Surface
Beyond the courtroom, additional accusations have gained traction online. Some market participants allege that Jane Street manipulated Bitcoin (BTC) prices through an algorithmic strategy. These claims suggest the firm consistently triggered sell-offs at 10 a.m. each day for months, subsequently repurchasing Bitcoin at reduced levels in a repetitive cycle. Further escalating the situation, market commentator MartyParty reported that Trump Media has sent a letter to members of Congress, urging a full federal investigation into Jane Street, Citadel, and other firms for alleged "naked short selling"—a practice, restricted under U.S. securities law, where shares are sold without first being borrowed. As of Thursday afternoon Eastern Time, there has been no official confirmation from Trump Media, Jane Street, or Citadel regarding the alleged letter to Congress or the specific claims of naked short selling. The recent allegations continue to circulate without official verification from the implicated parties.
