The harvesting tactics of the quantitative giant Jane Street

Original Author: Bull Theory

Compiled by: Ken, Chaincatcher

From the number of accusations faced, it seems that Jane Street's entire business model is to extract liquidity and profit from artificially creating market crashes.

This situation has not occurred just once, but multiple times.

The Indian stock market case is the clearest example of how Jane Street operates. They ran an algorithm similar to the "10 AM crash" in India, profiting $4.23 billion, but were ultimately exposed and temporarily banned by the Securities and Exchange Board of India (SEBI).

Here’s how it worked.

Indian Script

From January 2023 to March 2025, Jane Street's entities in India generated approximately ₹365.02 billion in net profits. On 21 marked expiration dates, SEBI identified ₹48.4357 billion as suspected illegal gains. SEBI issued a 105-page interim order and subsequently imposed a trading ban. The involved funds have been deposited into a third-party escrow account. Relevant appeals are still ongoing.

What’s important is not the ban itself, but the operational mechanism behind it.

Jane Street's operational structure is as follows:

1. Jane Street Singapore Pte Ltd (FPI)

2. Jane Street Asia Trading Ltd (FPI, Hong Kong)

3. JSI Investments Pvt Ltd (Indian subsidiary)

4. JSI2 Investments Pvt Ltd (Indian subsidiary)

This separation of entities allows the apparent trading side and the actual profit side to belong to different corporate entities.

How Does Expiration Date Manipulation Work?

The settlement of index options is based on the final value of the index on the expiration date. Minor fluctuations in the index on the expiration date can generate huge profits on the options side.

The strategy described by the Securities and Exchange Board of India operates as follows:

Morning Phase (around 9:15 AM to late morning)

• The Indian entity actively buys components and futures of the Bank Nifty (bank index).

• It places massive orders.

• On certain days, their trading volume accounts for a significant portion of the total market volume.

Buying weighted stocks pushes up the index. Meanwhile, offshore entities establish a large short position in options.

• Sell call options.

• Buy put options.

• Net exposure is heavily bearish.

From the Delta value, the scale of the options position is several times that of the stock position. This indicates that buying stocks is not the main bet, but merely a preparatory step.

Afternoon Phase (late morning to close)

After building the options book, the Indian entity reverses its trading direction. They begin to sell off the same stocks and futures in large quantities.

The selling pressure causes the index to drop. If the index closes near certain strike prices, the short call options become worthless, while the put options appreciate significantly.

Spot stocks incur slight losses, while the options side profits handsomely.

SEBI provides an example:

• Morning purchases amounting to ₹437 billion.

• Options Delta exposure significantly expands. Cash/futures losses of ₹6.16 billion.

• Options profits of ₹73.493 billion.

Net profit for the day: ₹67.333 billion.

Spot market activity affects the settlement point. Meanwhile, the derivatives book captures the real profits. This is the common trick in India: using the funding advantage of the underlying asset to manipulate derivatives profits.

2) 10 AM Manipulation Script

Now let’s look at Bitcoin.

For months, there has been repeated selling pressure around 10 AM Eastern Time. This time frame is very important:

• U.S. stock markets open.

• Liquidity increases.

• Large orders can be executed efficiently.

• The derivatives market is active.

Observed pattern:

Prices suddenly drop. Leveraged long positions are liquidated. This triggers a chain of forced selling. Prices then stabilize.

The cryptocurrency market has extremely high leverage. A drop of 2% to 3% is enough to wipe out a large number of long positions.

When the liquidation engine starts:

• The exchange automatically sells collateral.

• Market orders flood the order book.

• Prices drop further.

• More liquidations are triggered.

If a large trading firm actively sells during this window: it can initiate the first wave of declines. The liquidation mechanism amplifies this trend. The chain reaction completes the remaining harvesting. After forced selling clears, prices often rebound. This is structurally very similar to the Indian case: in India, manipulating the index is to affect options profits. In the cryptocurrency realm, spot price fluctuations affect derivatives liquidations and futures positions.

The movement of the underlying asset is the trigger, while the derivatives side is the real profit engine.

Another crucial detail is that after the lawsuit against Terraform was filed on February 23, 2026, this 10 AM pattern stopped.

Bitcoin not only did not face selling but instead rebounded. The ones being liquidated were shorts, not longs. When a recurring mechanical pattern vanishes just as legal regulatory pressure appears, market participants will naturally pay extra attention.

3) From Bitcoin's Perspective, Was the LUNA Crash Used to Force BTC Prices Down?

In May 2022, Terra's UST stablecoin plummeted from a $40 billion ecosystem to zero in just a few days. The peg mechanism broke, panic spread rapidly, and the Bitcoin reserves originally used to defend the system were forced to be utilized under extreme pressure.

Aside from the de-pegging event itself, the lawsuit raised another structural possibility.

Terraform Labs had used Bitcoin reserves to maintain the peg of UST. If UST became unstable, these reserves had to be deployed immediately.

This means that in emergencies, Bitcoin must be sold or pledged. And emergencies would completely strip away bargaining power.

The lawsuit alleges:

• Jane Street knew that the liquidity of the Curve liquidity pool had dried up.

• In extremely weak liquidity conditions, they executed a $85 million UST sell-off.

• The pegged exchange rate rapidly collapsed.

• During the crisis, Jane Street maintained direct contact with Do Kwon.

• Reportedly, discussions included purchasing Bitcoin at a very low discount, possibly between $200 million and $500 million.

If Terraform was forced to defend the pegged exchange rate, they would have to quickly mobilize Bitcoin reserves. If someone knew in advance that this pressure was coming, then increasing the short pressure on UST would accelerate the arrival of that moment.

Applying greater pressure on the peg mechanism means:

• Accelerating the use of reserves

• Weakening the counterparty's negotiating position

• Acquiring BTC at a discount

The speculation arising from this is simple:

Was this crash merely an ordinary trading event, or was it used as leverage to plunder Bitcoin reserves at a very low price?

These are accusations in ongoing litigation. But the sequence of events clearly exposes the profit motives involved.

If you want to understand the complete analysis of the Terra event, we have published a detailed tweet.

4. Next is the ETF

Jane Street has become an authorized participant for several major Bitcoin ETFs. Authorized participants are at the core of the ETF creation and redemption mechanism.

They can:

Create ETF shares.

Redeem ETF shares.

Hedge through futures.

Sell options.

Engage in spread arbitrage.

Public 13F filings only show long positions in ETFs. But they do not show: short futures, swap contracts, sold options, and net exposure after hedging. Disclosed long positions do not equate to net long exposure.

It could be:

Going long on ETF stocks, shorting CME futures, shorting options, and engaging in pair trading.

What the public sees is only the apparent trading side, while the complete derivatives book remains hidden in the shadows. Now, combine this with the recurring spot selling pattern.

If spot prices are pressured during a specific time window, while ETF exposure is increasing, the visible surface data cannot reveal the complete strategy.

In India, stock trading is transparent, while options exposure is the real profit driver. In ETFs, stock holdings are transparent, but derivatives positions may not be publicly disclosed. The structural similarity between the two is the opacity between apparent trading and hidden trading.

5) Most importantly, their trading technology is classified as confidential

The Millennium lawsuit------the sealed $1 billion strategy. The Millennium lawsuit is by no means an interlude; it touches the technical core of the entire structure.

In early 2024, two senior traders left Jane Street:

• Doug Schadewald ------ Senior index options trader

• Daniel Spottiswood ------ His direct subordinate

They joined Millennium Management. Shortly thereafter, Jane Street sued Millennium in Manhattan federal court, accusing it of stealing a highly valuable proprietary trading strategy.

During the court proceedings, a key detail was made public: the strategy focused on Indian index options and generated approximately $1 billion in profits in just one year in 2023.

This figure changed the nature of the event. It was no longer a small arbitrage strategy but a super profit engine.

What did this lawsuit expose?

The lawsuit clarified three things:

• The strategy is driven by options.

• It operates in the Indian index derivatives market.

• It has extremely high profits and is repeatable.

However, almost all content about how it operates has been concealed from the public. Large portions of court documents were redacted. The public cannot see:

• The algorithm generating signals

• The timing model for execution

• The framework for selecting strike prices

• Delta exposure management

• Cross-entity coordination processes

• Risk control systems

The only visible number is profit. And the engine itself remains hidden.

The defense's argument:

Millennium claimed that the structure of the options market in India is public information, and the strategy is not a trade secret.

The departing traders claimed that the system is built on experience and expertise, not hidden automated models. This raises a key divergence:

If the advantage is merely structural, then anyone can replicate it.

If the advantage lies in execution------timing control, coordination, position size management, layered derivatives layout------then the system itself is the core asset. The execution system can be redeployed.

Why did this lawsuit trigger regulatory scrutiny?

This lawsuit had an unexpected consequence. It publicly disclosed that a single trading strategy could capture about $1 billion in profits in India each year.

This exposure triggered media coverage. Media coverage attracted regulatory scrutiny. Regulatory scrutiny ultimately led to an investigation by SEBI. SEBI's subsequent interim order described a structure of expiration date manipulation:

• Spot trading affects index movements

• A massive options book captures substantial returns

The exposure of this $1 billion strategy made the investigation inevitable. The case was settled in December 2024. The settlement terms were not disclosed. There was no comprehensive trial. No detailed strategy blueprint was published.

Its core operational mechanism remains sealed.

Why is the redacted content important?

The importance of the redacted content lies in its structure. A $1 billion options strategy:

• Operates across multiple entities

• Relies on layered derivatives layout

• Is fiercely defended in federal court

• Its internal operational mechanisms are erased from public view

And it is the same company that later: faced SEBI accusations of expiration date manipulation; became embroiled in lawsuits related to Terra; served as a core authorized participant for major Bitcoin ETFs; held substantial ETF positions without disclosing its derivatives hedging situation.

The internal trading system (i.e., execution layer) is invisible in public documents. Public reports only show positions.

They do not display execution logic. Court documents only show accusations. They do not display algorithm code. Regulatory orders only show results. They do not reveal proprietary models.

When a company's most profitable system is classified as top secret, and similar structural patterns are repeatedly played out in other markets, it is only natural that strict scrutiny arises.

If a company can:

Manipulate the underlying market using massive amounts of capital. Overlay even larger derivatives exposure. Control influence at the settlement level. Coordinate operations across entities. Delve into the underlying mechanisms of ETFs. And keep the execution system highly confidential.

Then, surface data can never reflect the full picture.

A company at the center of every market manipulation event?

Sam Bankman-Fried (SBF) worked at Jane Street for about three years before founding Alameda Research and later FTX. In April 2021, FTX invested $500 million in Anthropic, acquiring about 8% of the shares.

In May 2022, Terra and UST collapsed. Reports indicated that Alameda was severely impacted in that widespread collapse of the crypto market. FTX subsequently declared bankruptcy.

In the bankruptcy liquidation proceedings of FTX from 2023 to 2024, its holdings in Anthropic were sold at a valuation close to $18 billion.

Jane Street was the second-largest buyer in that funding round, spending about $100 million to acquire shares. Thus, the flow of funds is closed-loop as follows:

• A former Jane Street trader founded FTX

• FTX early invested in Anthropic

• FTX collapsed

• Anthropic shares were liquidated

• Jane Street acquired part of them, now valued at $2.1 billion

In 2024, the Trump Media Technology Group officially wrote to Nasdaq, alleging potential naked short selling and naming Jane Street as one of the companies responsible for the massive trading volume during its stock price crash. Although no formal legal accusations were made afterward, the company was publicly named in this dispute.

Along with the following events:

• SEBI issued an interim ban, accusing it of manipulating expiration date indices and seizing about $570 million

• The Millennium lawsuit exposed a redacted confidential Indian options strategy that made about $1 billion in profits in a year

• Ongoing Terra lawsuits alleging insider trading related to the UST collapse

• Jane Street serving as a core authorized participant for major Bitcoin ETFs

• Its position as one of the largest buyers of IBIT

Spanning stocks, derivatives, cryptocurrencies, ETFs, and private AI equity financing rounds, the same company repeatedly appears in the following situations:

Market manipulation. Liquidity crises. Regulatory scrutiny. Capital sell-off events.

None of these independent events can definitively prove collusion.

But the unsettling reality is:

Whenever there is a significant market crash or turmoil, Jane Street is often present.

Is this merely a coincidence because it is one of the largest quantitative trading firms in the world, with operations across all major asset classes?

Or is there a deeper structural issue------that this company's market positioning inherently allows it to reap huge profits from manipulation or crises?