Opinion: Jane Street trading firm may have helped precipitate Terra’s collapse

Igor Igamberdiev, head of Wintermute’s research department, traced a transfer that could have destabilised the price of the algorithmic stablecoin Terra USD (UST) in May 2022.

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Many post-mortems after the Terra events have focused on “Wallet A” which played a large role in UST depegging

“Wallet A” swapped 85M UST for USDC and imbalanced the UST/3CRV Curve pool

There is a good chance this wallet is related to @JaneStreetGroup pic.twitter.com/iUGLmFCTaT

— Igor Igamberdiev (@FrankResearcher) February 28, 2023

Based on on-chain analysis, the researcher concluded there was a high probability that the wallet in question was linked to Jane Street.

On May 3, 2022, Clearpool announced that the trading firm borrowed 25M USDC from BlockTower Capital using BlockTower’s permissioned lending pool.

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On May 3, 2022, Clearpool announced that Jane Street borrowed 25M USDC from @BlockTower using their permissioned lending pool

This news made it possible to identify three addresses of the trading firm, of which we are most interested in only onehttps://t.co/mBROglteMD

— Igor Igamberdiev (@FrankResearcher) February 28, 2023

Igamberdiev identified three addresses belonging to the trading firm. One of them—Wallet A—was of particular interest, he said.

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Within two weeks of Terra’s collapse, this address:

? Received $15M and repaid them along with an additional $10M to the lender without any use

? Invested $150k in @tonicdex

? Borrowed $25M again and deposited them to a very interesting Coinbase wallet pic.twitter.com/57MFbFMOib

— Igor Igamberdiev (@FrankResearcher) February 28, 2023

В течение двух недель после краха Terra этот адрес: получил $15 млн и вернул их вместе с дополнительными $10 млн кредитору без каких-либо признаков использования; инвестировал $150 000 в Tonic DEX; снова занял $25 млн и депонировал их на очень интересный кошелек Coinbase», — рассказал исследователь.

According to him, prior to the last transaction, the Wallet A address on the Coinbase wallet swapped 85 million UST for USDC, thereby unbalancing the UST/3CRV pool on Curve.

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Before receiving $25M from Jane Street, this Coinbase wallet received 84.5M USDC from the UST depegger after the fateful swap

This wallet didn’t have any other interactions other than the two mentioned deposits

Therefore, they are highly likely to belong to the same entity pic.twitter.com/vOz934hlzm

— Igor Igamberdiev (@FrankResearcher) February 28, 2023

Igamberdiev added that Jane Street did not necessarily have ill intent.

Investors filed a lawsuit against the Stablegains platform for promoting the collapsed UST.

charged Terraform Labs and its CEO Do Kwon with orchestrating multi-billion-dollar securities fraud.