The theory spawned a series of viral posts in the fever swamps of social media, and gained further traction when Bitcoin staged a midweek rally—following further claims that Jane Street had changed its trading patterns after being “exposed.” The claims, however, appear to be flimsy at best in the eyes of Wall Street veterans. They were also dismissed by a person close to Jane Street, who was not authorized to speak for attribution but described the claims as an “absolutely ridiculous” conspiracy theory.
“The argument makes zero sense and completely misunderstands how derivatives and perps/futures work as well as what an AP does for these ETFs,” said Rob Hadick, a partner at Dragonfly Capital, who has previously worked at Goldman Sachs and other Wall Street firms.
Even though the rumors about Jane Street manipulating Bitcoin appear to lack substance, recent controversies surrounding the firm may have helped to fuel them. Those include a lawsuit filed last week by the administrator winding down the bankrupt stablecoin issuer Terraform Labs, which accused Jane Street of insider trading as the firm collapsed.
In a statement, Jane Street rejected what it describes as “baseless, opportunistic claims” related to its role at Terraform Labs, noting that the firm’s stablecoin imploded owing to massive fraud perpetrated by its now-imprisoned founder. This explanation is the consensus view, but a broader dislike for Jane Street among some in the crypto and financial world may be fueling claims the firm was complicit in the demise of Terraform Labs.
All of this suggests that, at a time of prolonged market pain, the crypto sector may have found a convenient scapegoat. “It’s just people who don’t understand markets and want there to be a boogeyman to blame for why they haven’t made more money,” said Hadick.
