Crypto Market Adds $150B+ After Jane Street Lawsuit

What the Lawsuit Alleges

The 83-page complaint, filed in the Southern District of New York (Case No. 1:26-cv-1504), was brought by Todd R. Snyder, the court-appointed administrator overseeing Terraform Labs’ bankruptcy wind-down.

The suit accuses Jane Street Group LLC and specific traders of insider trading and front-running during the May 2022 TerraUSD (UST) collapse.

Core Allegation

According to the filing:

• On May 7, 2022, Terraform quietly withdrew $150 million UST from Curve’s 3pool.
• Roughly 10 minutes later, a wallet allegedly linked to Jane Street withdrew or swapped $85 million UST.
• The transaction was the largest single move in that pool at the time.

The complaint claims that a former Terraform intern who later joined Jane Street shared material non-public information via a private chat group. That alleged leak, according to the estate, allowed Jane Street to unwind exposure at precisely the right moment, accelerating UST’s depeg and the eventual $40 billion ecosystem collapse.

The suit seeks damages, disgorgement of profits, interest, and a jury trial.

Jane Street has rejected the allegations, calling the lawsuit a “desperate” attempt to extract money and arguing that Terra’s collapse stemmed from internal fraud by Do Kwon and Terraform management.

Importantly, the complaint focuses on 2022 Terra events and does not accuse Jane Street of manipulating Bitcoin in 2026.

Bitcoin and Altcoins Surge

Almost immediately after the lawsuit gained attention, the broader crypto market rallied.

Bitcoin (BTC)

• Rose from ~$62,500–$63,000 lows
• Climbed above $69,000–$70,000 briefly
• Traded around ~$68,300 as of Feb 26
• Gained roughly 8–10% over 48 hours

Community estimates suggest Bitcoin alone added more than $100 billion in market capitalization during the move.

Ethereum (ETH)

• Reclaimed the $2,000 level
• Rose from ~$1,800–$1,935 to ~$2,055–$2,064
• Posted gains between 5–13% depending on timeframe

XRP and Others

• XRP surged toward $1.38–$1.42
• Solana climbed to around $88+
• Many altcoins gained 3–10% or more

Short liquidations reportedly exceeded $500 million across the market, fueling the rally.

The “10 AM Dump” Narrative

A major part of the market reaction was psychological.

For months, crypto traders had complained about a recurring “10 AM ET dump” pattern — sharp Bitcoin selloffs coinciding with the U.S. stock market open.

Jane Street, as a major ETF authorized participant and institutional market maker, was frequently rumored to be behind aggressive hedging or arbitrage flows during that window.

After the lawsuit became public:

• The 10 AM sell-off pattern reportedly disappeared for several days
• Bitcoin rallied through U.S. open instead of fading
• Community sentiment flipped sharply

On X, traders widely claimed that Jane Street had paused aggressive activity due to legal scrutiny. Posts circulated suggesting the “script flipped” the moment the lawsuit hit.

However, this link remains speculative.

Is There a Proven Connection?

There is no verified evidence that:

• Jane Street was behind recurring 10 AM sell pressure
• The lawsuit directly caused any pause in activity
• The Terra allegations relate to current Bitcoin trading

It is entirely possible that:

• The market was deeply oversold
• Technical double-bottom patterns triggered buying
• Shorts were overcrowded
• The lawsuit served simply as a narrative catalyst

Markets often rally when uncertainty shifts, even without structural change.

Still, the timing was powerful. After weeks of bearish momentum, the lawsuit provided a clear headline around which traders could coordinate a reversal.

Why the Market Reacted So Strongly

Three forces likely combined:

1. Oversold technical conditions
2. Heavy short positioning
3. A sudden shift in narrative

When traders perceive that a dominant seller may be sidelined, whether true or not, they reposition quickly. That perception alone can drive billions in flows.

In this case, the result was a $150B+ surge in total crypto market capitalization in under two days.

Bottom Line

The Terraform estate’s lawsuit against Jane Street triggered one of the strongest relief rallies of 2026 so far.

Bitcoin reclaimed key levels. Ethereum broke back above $2,000. Altcoins followed. Short liquidations accelerated the move.

Whether the rally stems from legal consequences, structural market shifts, or simply a narrative reset remains unclear.

For now, the market has flipped from fear to momentum. The next question is whether follow-through buying sustains the breakout or whether this was simply a powerful short squeeze fueled by timing and psychology.