Bitcoin Was Built To Escape The Rigged System — They Just Built The Cage Around It

The price of Bitcoin was being manipulated by the same company that trained convicted felon Sam Bankman-Fried of FTX fame. At least that's the claim in a recent lawsuit. Now, as we go through the exact allegations, you are going to see yet again another mechanism by which money is siphoned away from the average person and shoved into the coffers of the elite because they understand the system better than the average person. And if we do not find a way to narrow the K-shaped economy, we are going to be in a world of hurt. Now, the allegations. How on earth is it possible for a single company to affect the price of Bitcoin when the whole point of Bitcoin was to give people a liferaft out of a system that is constantly manipulating them. As you're going to see, this story is about that far bigger manipulation. It isn't just about Bitcoin. It's not even about the company doing the manipulation. It's ultimately about how the most powerful players in traditional finance figured out how to take the one asset that was designed to be beyond their reach and still bring it back under their control. Here's exactly what I mean. There is a trading firm in Manhattan that made more money last year than Goldman Sachs, Bank of America, and Citi Group's trading desks. They don't have a CEO. They have no public shareholders. And most people have never even heard their name. They're called Jane Street. And it's estimated that they're behind more than 10% of every stock trade placed in the United States. They are not a bank. They're not a hedge fund. And because of how they're structured, they are required to disclose almost nothing about what they're actually doing. There are only four companies on the entire planet that are authorized to create and redeem shares for BlackRock's Bitcoin ETF. And they're one of them. And now people are alleging that they engineered the collapse of a $40 billion crypto ecosystem. According to a recent lawsuit, starting in November of 2025, Bitcoin mysteriously began dropping between 2% and 3% at exactly 10:00 a.m. Eastern time every single trading day. And every single time, millions of dollars in retail positions got liquidated in the chaos. Then, by 10:30, the price would just bounce right back to normal. The playbook Jane Street is accused of using to make that happen is a masterclass in one of the obscure ways that hyper-sophisticated traders siphon money from everyone else via market manipulations. To be clear, no one is accusing them of hacking anything. Instead, what's being alleged is far more elegant. The claim is that they use a set of legal exemptions that apply to only the smallest number of firms, exemptions that most people don't even know exist, to create a cycle, a machine, if you will, that systematically pushed the price of Bitcoin down at the exact time every single trading day, wiping out regular people's positions and generating profit for Jane Street over and over again. Here's how they did it. Jane Street is a firm founded in 1999, headquartered in Manhattan. They employ about 3,000 people. They're what's called a quantitative trading firm. It's a subtype of trading firm that takes a different approach to the market than most firms. Because they trade their own money, and not other people's money, like banks and hedge funds, they are subject to dramatically fewer disclosures. Like I said, they don't have a CEO. They run by a management committee of 30 to 40 people. There are no public shareholders demanding transparency, and that setup allows them to operate with a level of secrecy that would be illegal for almost any other financial institution of their size. That's the company. Massive trading volume. Extremely well connected. Very secretive. Almost no public accountability. But what makes this story consequential is how Jane Street interfaces with the Bitcoin market. When BlackRock launched its Bitcoin ETF, ticker symbol IBIT, they needed companies to actually make the system work behind the scenes. These companies are called authorized participants. And an authorized participant is basically the middleman between the ETF and the actual asset, in this case, Bitcoin. They're the ones who create new shares when demand goes up and redeem shares when the demand is going down. This gives Jane Street enormous privileges. When you're an authorized participant, you get access to a set of regulatory exemptions. The first exemption is something called regulation show. Regulation show is the rule that's supposed to prevent people from selling shares they don't actually own. That's called short selling. And for regular investors, there are strict rules around it. But as an authorized participant, Jane Street is exempt from key parts of that regulation. They create and sell ETF shares without the same restrictions that apply to you and me. The second exemption is even more important. As an authorized participant, Jane Street is only required to publicly disclose their long positions. That means they have to tell you what they own, but they don't have to tell you what they're betting against. They don't have to disclose their short positions. They don't have to disclose their options. They don't have to disclose their derivatives. So the public, and that includes you, only ever see half of the picture of what they're actually doing. You see what they're holding, but you never see what they're hedging. And that gap between what's visible and what's hidden is where the entire alleged scheme lives. Think about it this way. Imagine you're playing poker. And one player at the table gets to show you only the cards they want you to see. You though have to show all of yours. They don't. And on top of that, they get to make moves that would be illegal for anyone else at the table. Imagine how they might come out ahead. And that's the real setup. That's the structural advantage that Jane Street has. Now, let me walk you through exactly how the allegations claim Jane Street used this advantage. Step one, Jane Street buys real Bitcoin on the open market. Actual Bitcoin. On paper, they look like they're long Bitcoin. As far as the public can tell, Jane Street is a bunch of hodlers. That's all anyone can see. But according to the lawsuit, that's not all they're doing. Step two, at the same time they're buying spot Bitcoin, they're allegedly opening massive short positions through derivatives on a separate exchange. A short position is a bet that the price is going to go down. So, now they're actually working both sides. They own the Bitcoin and they've also placed a giant bet that it's about to go down. But because of the disclosure exemptions, they don't have to reveal the shorts. So, those are completely invisible. Other traders think they know what Jane Street is doing, but in reality, they're playing blind. Or worse, they're just playing confused. Step three, every trading day at exactly 10:00 a.m. Eastern Time, the moment the US stock market opens, the allegation is that Jane Street was using high-speed trading algorithms to dump enormous amounts of the Bitcoin they owned onto the market. And they weren't doing it because it was the exact moment the markets open. They did it at that exact time because that's when liquidity is at its thinnest, meaning there are fewer buyers in the market to absorb a big sell, making it easier to intentionally drop the price of Bitcoin and capitalize on their hidden shorts. Because when a massive sell order hits during a low liquidity window, the price doesn't just dip, it craters. Step four, the 2 to 3% drop is enough what are called liquidations. Much to my dismay, a lot of retail traders, regular people, buy Bitcoin using borrowed money. It's called leverage. And when you use leverage, your broker sets a price threshold on the Bitcoin you own to ensure they get paid back before the price of Bitcoin drops too far and you're too broke to pay them back. If the price drops below that threshold, your Bitcoin just gets automatically sold. You don't get a phone call or a warning, the system just cashes you out. So, when Bitcoin drops 2 to 3% in a matter of minutes, thousands of leveraged retail positions hit their thresholds all at the same time. They all get force sold simultaneously and all of that force selling dumps even more Bitcoin onto the market, which drives the price down further, which triggers more liquidations, which drives the price down further, and it becomes a true cascade. Each wave of selling triggers the next wave and the people getting wiped out didn't do anything wrong necessarily, they just happened to be holding a leverage position at 10:00 a.m. on a day when someone with special privileges decided to press a button. Step five, now Jane Street collects. The Bitcoin they sold in the dump, they take a small loss on that, sure, but the short positions, the hidden ones, the ones the public can't see, those are now extremely profitable because the price just fell off a cliff. And not just from Jane Street's initial sell, remember? It's going down and down and down from the entire cascade of retail liquidations that followed. They close the shorts, they book a big profit, and then they're on to step six, the reset. After closing their short positions, they buy back the Bitcoin they sold, but now at the crashed price. That buying pressure then pushes the price back up. Retail traders see the bounce, fear of missing out kicks in, new money flows into the system, and by 10:30 a.m. the price has recovered almost entirely. Everything looks normal, and the next morning the whole cycle starts again. Now, here's the real attention-getter. On February 23rd, a lawsuit was filed against Jane Street alleging their involvement in the collapse of the Terra crypto ecosystem, the whole shebang. We're going to get into the specifics of that later, but first understand this because this part is just as insane. As soon as the lawsuit became public, wouldn't you know it, the daily 10:00 a.m. Bitcoin drops just stopped. They just stopped. Huh? Go figure. Who would have guessed? Within 48 hours of the lawsuit going public, Bitcoin surged 10%. 200 billion dollars flooded back to the crypto market. 213 million dollars in short positions got liquidated, and a quarter of a billion dollars flowed into BlackRock's Bitcoin ETF all in a single day. I'll let you guys argue in the comments as to whether the method that Jane Street is accused of using is manipulation or simply a trading firm using the rules to their advantage. As, believe it or not, this isn't a cut-and-dry legal case. Somehow, someway, there are people on both sides of this argument. Now, I will say however that this is not the first time that Jane Street has been accused of market manipulation. Case in point, India. In July of 2025, India's securities regulator, an organization called SEBI, found Jane Street guilty of manipulating India's stock market. And the strategy they used was almost identical to what's being alleged with Bitcoin. They were running what regulators described as a morning pump, afternoon dump scheme. Buy in the morning, drive the price up, then sell in the afternoon, and profit off the decline. Same structure, same logic, different country, different asset, same playbook. SEBI didn't just slap them on the wrist though. They froze 566 million dollars of Jane Street's funds, and they barred the firm from trading in India's derivatives market entirely. And India isn't the only country with a beef. China has caught multiple Jane Street accounts allegedly manipulating silver ETF prices. So now we're looking at a pattern that spans at least three different markets in three different countries involving three different asset classes, stocks in India, silver in China, and now Bitcoin in the United States. At a certain point, you have to ask yourself, how many times does the same company have to get caught doing the same thing before we stop calling it a coincidence? And that brings us back full circle to the recent lawsuit that stopped the 10:00 a.m. Bitcoin manipulation. The allegation is straightforward. Jane Street had insider information that made it possible for them to trigger a meltdown of the entire Terra ecosystem, taking 40 billion dollars of value with them, and destroying the life savings of millions of people. Here's how the lawsuit alleges it went down. Terra, a crypto project built and managed by Terraform, was structured around two tokens, UST, which is a stablecoin, and it was supposed to be always worth $1. Luna was its companion token. When UST dipped below a dollar, the system automatically minted more Luna to push UST back up. That's the simple algorithm that kept UST pegged to a dollar. To keep UST stable during real-world trading, Terraform deposited massive amounts of UST into third-party liquidity pools, basically shared reservoirs of capital on decentralized exchanges where people buy and sell. The bigger the pool, the more trading pressure it can absorb without the price moving. As long as the pool is deep enough, UST holds its dollar peg. Drain the pool and there's nothing left to absorb a big sell and the peg is at risk of breaking. Back in 2022, Terraform strangely pulled $150 million from the Curve liquidity pool without telling anyone. Curve was a third-party decentralized exchange. It wasn't owned by Terraform, but Terraform had deposited a huge amount of UST in it to provide the liquidity that's needed. Is withdrawing that amount unusual? Yes. Pulling that much liquidity without warning the pool, that's essentially backstopping your stable coins peg, is a big deal. It weakened the pool's ability to absorb selling pressure at a critical moment. However, the lawsuit's theory is that Bryce Pratt of Jane Street had back channel communication with the Terraform insiders and they gave him advanced knowledge that Terraform was about to pull the $150 million. And that's allegedly how Jane Street was able to move their money within just 10 minutes. 10 minutes is a very small window. The complaint describes the Jane Street withdrawal as their largest ever single swap, which suggests this wasn't routine portfolio management. Now, the key legal question in all of this is going to be was Jane Street doing standard trading that came at just a terrible time or did they pull their money based on insider knowledge? And if it was insider knowledge, did they move their money just as a precaution or specifically because they wanted to hurt Terra? What the lawsuit explicitly alleges is that Jane Street used insider information to avoid more than $200 million in potential losses and to actually profit during the meltdown. So the primary claim is that Jane Street front-ran the collapse for their own benefit. They got out and got positioned well before anyone else knew what was happening. The complaint doesn't go as far as saying Jane Street's goal was to destroy Terra, but it does argue that their $85 million withdrawal helped trigger the panic that sent UST off its peg. So even if their intent was just self-preservation, the lawsuit claims the effect was to accelerate the collapse. Now, Jane Street vigorously denies the allegations and they have called the lawsuit desperate and a transparent attempt to extract money. They say the losses were caused by Terraform's own management fraud. And to be fair, Terraform's founder, Do Kwon, did plead guilty and was sentenced to 15 years in prison. The company agreed to pay $4.47 billion in penalties. Terraform absolutely bears responsibility for what they built, but as one legal analyst put it, Terraform's guilt does not automatically excuse profiting from insider knowledge of the coming collapse. Both things can be true. This whole saga is absolutely insane, but ultimately, no matter what comes of the lawsuit, it's not really about Jane Street or even Bitcoin. Jane Street's alleged manipulation of the Bitcoin market is but another case study of a known mechanism that nobody argues exists for how markets can be manipulated to transfer money from the average person to the most sophisticated. We live in a K-shaped economy that is quite literally driving our country crazy. And when we turn over rocks and we find this kind of potential manipulation, it is absolutely driving us that much crazier, that much faster. We've spent so much time de-industrializing our economy and hyper-financializing it that we've forgotten about the vulnerabilities like this that that creates. By wrapping Bitcoin in financialized instruments, we make Bitcoin accessible to a whole new market, which is great, but we also burden it with new vulnerabilities and move price discovery from the asset itself to these more exotic markets, exposing it to the same system that has been moving risk from the powerful and knowledgeable to the powerless for decades. Authorized participants, hidden derivatives, regulatory exemptions that only apply to a handful of firms, the same infrastructure that existed long before crypto was even invented, just found a new asset to plug into. And the people who are buying Bitcoin because they believed it was the escape from exactly this kind of manipulative system, they're the ones that were getting liquidated at 10:00 a.m. every morning. Whether Jane Street is ultimately found guilty is for the courts to decide, but the structure that made all of this possible, that's not an allegation. It's just how the system works. And until we're willing to get rid of the Fed, balance our budget, and or use sound money, we are all forced to enter the casino and play against these hustlers. Learn what you can, avoid playing with debt, and be sure to hit the subscribe button so you never miss insights like this into how the system actually works. All right, guys, until next time. Be legendary. Take care. Peace. If you like this conversation, check out this episode to learn more. Right now, millions of Americans are quietly losing their jobs. Not factory workers, not retail clerks, college-educated professionals. The people who did everything right. They got a degree, landed a career, built a life