WSJ reporter: Terra's flawed algorithm, not Jane Street, caused collapse

Wall Street Journal (WSJ) reporter Sam Kessler argued on X that the collapse of Terra/Luna and the subsequent crypto market downturn were caused by the project's inherently flawed algorithm, not by the actions of Jane Street. He suggested that crypto investors on X seem to be suffering from a form of collective amnesia, stating it has already been established that insider trading was not the cause of Terra/Luna's failure. Kessler noted that while Do Kwon claimed the UST algorithm would maintain its peg, Kwon lied and is now in prison. He added that Terraform Labs and Jump Crypto artificially inflated the price of UST. While acknowledging that Jane Street could be found guilty of insider trading and may have helped trigger the collapse, he stressed that a U.S. court has already ruled on who is responsible for the crash and the resulting market contagion. He emphasized that any speculation to the contrary is not at all serious. His comments come amid recent controversy in multiple online communities alleging that investment banks like Jane Street, acting as authorized participants (APs), manipulated BTC prices through algorithmic selling at specific times. Terraform Labs has sued Jane Street, accusing the firm of using inside information to profit from the 2022 collapse. These suspicions have been further fueled by community claims that the timed price drops ceased after Terraform Labs filed its lawsuit.