Time hasn’t erased the pain caused by the collapse of Terra in May 2022. Now, new legal proceedings have brought to light possible "black box operations" behind the scenes of that disaster. On February 24, the court-appointed bankruptcy administrator for Terraform Labs filed a lawsuit in federal court in New York, targeting global market-making giant Jane Street.
The details revealed in the complaint are startling. On May 7, 2022, less than 10 minutes after Terraform Labs withdrew 150 million UST from the Curve liquidity pool, a wallet address linked to Jane Street followed suit, extracting another 85 million UST from the same pool. This highly precise "front-running" behavior is alleged to have exploited non-public insider information, enabling the institution to profit illegally and, even worse, accelerating the UST depegging and the collapse of the entire Terra ecosystem.
This lawsuit isn’t just a rehash of old wounds—it has once again struck a nerve in the market regarding the dangers of "information asymmetry." In the crypto world, the moves of whales can already shake the market. If those moves are based on privileged information, it’s a devastating blow to ordinary investors. As of this writing, on the Gate trading platform, Luna Classic (LUNC)—a token tied to the Terra ecosystem—is quoted at $0.00012873, with the market still digesting the long-term fallout from this historic event.
Fresh Wounds: ZachXBT Teases Major Investigation Targeting "Most Profitable Businesses"
If the Terra lawsuit is about reckoning with the past, then blockchain sleuth ZachXBT’s latest announcement is a declaration of war on the present. On February 23, ZachXBT made headlines by announcing a major investigation, set to be released on February 26, into one of the crypto industry’s "most profitable businesses."
The news quickly sparked a frenzy of speculation in overseas communities. ZachXBT emphasized that the investigation involves "multiple employees systematically abusing internal data for insider trading," pointing to systemic misconduct. While the specific targets haven’t been named, market speculation has centered on Polymarket, WLFI (World Liberty Financial), and certain Solana ecosystem projects.
- The Polymarket Dilemma: As a prediction market platform, Polymarket’s employees theoretically have access to sensitive information such as order flow and outcome resolutions. The platform has previously drawn scrutiny for its "uncannily accurate" predictions on geopolitical events, fueling insider trading debates. Ironically, Polymarket even launched a prediction market on "Who is ZachXBT investigating?"—but excluded itself as an option, drawing widespread ridicule.
- WLFI’s PR Crisis: WLFI, a crypto project associated with the Trump family, has also been embroiled in controversy. Its co-founder’s account was hacked, and Eric Trump deleted numerous related tweets. Amid ZachXBT’s looming investigation, the community has widely interpreted these actions as signs of guilt.
Regardless of who the investigation ultimately implicates, the announcement itself has dragged the issue of insider trading out of the shadows and into the spotlight.
The Sword of Regulation: Global Rules Move from "Warnings" to "Judgment"
A string of scandals has left global regulators with no excuse to remain on the sidelines. In 2026, crypto regulation is shifting from mere risk warnings to substantive legal actions and institutional frameworks.
In China, the regulatory stance remains clear and strict. In a notice released in February, the People’s Bank of China and seven other agencies reiterated that virtual currency-related business activities are illegal financial activities, and pledged to crack down hard on insider trading, fraud, and other criminal violations.
In the West, legislation is advancing rapidly. Japan’s Financial Services Agency plans to complete legislation this year, formally incorporating insider trading bans into the Financial Instruments and Exchange Act, and granting market regulators the authority to investigate and file criminal charges. The UK’s Financial Conduct Authority is also pushing new rules, aiming to finalize a comprehensive crypto regulatory framework—including insider trading prevention—by the end of 2026.
These developments make it clear: the crypto world is no longer a "lawless frontier." As traditional finance watchdogs begin to patrol the space, the room for profiting from information gaps will shrink dramatically.
Conclusion
From the evidence unearthed in the aftermath of Terra’s collapse to the impending "data bombshell" from ZachXBT, the crypto market in 2026 is undergoing a painful but necessary reckoning. Insider trading, a cancer eating away at market confidence, is now facing a two-pronged assault from global regulators and the crypto community itself.
For investors, this is ultimately a positive development. A more transparent and fair market environment is the foundation for healthy industry growth. Against this backdrop, choosing a compliant, secure, and information-transparent trading platform is more important than ever. As your trusted crypto asset platform, Gate will continue to monitor these developments, deliver authoritative market updates in real time, and provide up-to-date token price data. Remember: in the crypto world, the best way to protect yourself is to stay informed and approach every trade with due caution.
