Jane Street Faces New Lawsuit: Trump Media Calls For Federal Investigation

Jane Street, one of the world’s largest market-making firms, has come under growing scrutiny as a series of allegations have surfaced linking the company to major disruptions in the crypto market. 

The firm is already facing a federal lawsuit tied to the collapse of Terraform Labs, and now new claims circulating on social media suggest that Trump Media has accused Jane Street and other trading firms of “naked short selling” in a letter to Congress.

The legal troubles began earlier this week. On February 23, a lawsuit was filed in the US District Court for the Southern District of New York accusing Jane Street of using confidential information obtained from Terraform Labs to shield itself from heavy losses before the Terra/Luna ecosystem unraveled in May 2022. 

According to the complaint, Jane Street allegedly leveraged insider knowledge to avoid more than $200 million in potential losses ahead of the implosion. The firm has strongly denied the accusations, characterizing the lawsuit as “desperate” and describing it as a “transparent attempt to extract money.”

Beyond the courtroom, additional claims have gained traction online. Some market participants have alleged that Jane Street manipulated Bitcoin (BTC) prices by operating an algorithm that allegedly triggered consistent sell-offs at 10 a.m. each day for months. 

According to these claims, the strategy involved pushing prices lower, triggering liquidations among retail traders, and then repurchasing Bitcoin at reduced levels in a repeated cycle. 

Adding another layer to the controversy, market commentator MartyParty stated on Thursday that Trump Media had sent a letter to members of Congress calling for a full investigation into Jane Street, Citadel and other firms over alleged naked short selling. 

Naked short selling refers to the practice of selling shares without first borrowing them, a tactic that is restricted under US securities law. 

As of Thursday afternoon Eastern Time, there had been no official confirmation of such a letter, nor any public statement from Trump Media, Jane Street, or Citadel verifying the claim.

Featured image from OpenArt, chart from TradingView.com