India Moved on Jane Street Before Terraform’s Crypto Lawsuit

• SEBI banned four Jane Street entities from Indian markets in July 2025.
• Regulators calculated 36,502 crore rupees in profits from expiry-day trades.
• The crypto-related lawsuit in the U.S. is still being argued. 

Allegations against Jane Street have recently intensified after a lawsuit tied to the Terra collapse accused the firm of using advanced trading tactics in crypto markets. But while the Terraform case is still being argued in the United States, India had already taken regulatory action against the trading giant months earlier, banning four Jane Street entities from Indian markets in July 2025.

Terraform Lawsuit Rekindles Manipulation Debate

The recent filing by Terraform’s plan administrator in Manhattan federal court accuses Jane Street of insider-style trading and front-running around the 2022 Terra collapse. The claims remain unproven, and Jane Street has denied wrongdoing.

Online traders quickly connected the lawsuit to unusual market behavior, including what some described as repeated 10 AM liquidity drops in crypto markets. According to social media commentary, those patterns appeared to ease after the lawsuit became public, fueling speculation. However, no regulator has confirmed such claims.

While debate continues in U.S. courts, India’s securities watchdog had already been investigating Jane Street’s activities in a completely different market: equity derivatives.

SEBI’s Action in India

India’s capital markets regulator, Securities and Exchange Board of India (SEBI), launched a detailed investigation into Jane Street’s trading in index options.

According to regulatory filings and public orders, SEBI alleged that Jane Street used structured strategies designed to influence index levels, particularly on derivatives expiry days, in ways that benefited its options positions.

The regulator described two main strategies:

• Intraday index positioning, involving large stock trades timed around options expiry.
• “Marking the close” activity, where trading near the market’s end allegedly moved prices in a way favorable to derivative positions.

SEBI claimed these patterns generated unusually high profits and continued even after warnings were issued. In one example cited by SEBI, January 17, 2024, the strategy allegedly generated 735 crore rupees in a single session.

$4.3 Billion in Alleged Profits

SEBI accused the firm of manipulating the BANKNIFTY and NIFTY 50 indices across 18 derivative expiry days between January 2023 and March 2025.

According to the regulator’s calculations, the trades generated profits of 36,502 crore rupees, roughly $4.3 billion. The order outlined what SEBI described as a two-phase “expiry day trap” strategy.

While the U.S. case remains unresolved and allegations are still being contested, India’s regulator had already completed an investigation, issued findings, and imposed restrictions.

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