Terraform Labs accuses Citadel Securities of being involved in the demise of their stablecoin


Terraform Labs has asked the court to order Citadel Securities to turn over trade records, claiming that the firm was complicit in the May 2022 collapse of USTC.

Do Kwon, who helped develop Terraform Labs, has once again accused Citadel Securities of being behind a “concerted, intentional effort” to devalue TerraUSD (UST) in 2022.

In a petition filed on October 10th in the United States District Court for the Southern District of Florida, Terraform Labs seeks to force Citadel Securities to reveal records pertaining to its trading conduct in May 2022, around the time their stablecoin, now known as TerraUSD Classic (USTC), depegged.

It claims “certain third-party market participants” deliberately shorted the stablecoin in May 2022, causing it to fall from $1 to $0.02, rather than algorithmic instabilities.

In their petition, Terraform argues that the recent market volatility was not caused by flaws in the UST stablecoin’s core mechanism.

Instead, Movant claims that the market instability was the result of a deliberate and coordinated attempt by certain unnamed third-party market players to “short” and force UST to depeg from its one dollar pricing.

In addition, “publicly available evidence” is cited in support of the claim that Citadel CEO Ken Griffin had planned to short the stablecoin just before the depeg.

There is evidence to imply that Citadel Entities chief Ken Griffin planned to short UST around the time of the May 2022 depeg, according to reports in the public domain.

According to the lawsuit, Griffin was overheard saying, “They were going to Soros the f*** out of Luna UST,” over lunch with an anonymous trader. This remark was likely a reference to George Soros’ trading tactics, which include highly leveraged, one-way wagers.

Forbes claims that in May of 2022, Citadel Securities will begin trading the TerraUSD stablecoin. When Cointelegraph reached out to Citadel for clarification, we heard nothing back right away.

According to Terraform’s request, these records are essential to the company’s defense against the SEC case brought against Terraform Labs and its founder Do Kwon in February, which says the defendants participated in “orchestrating a multi-billion dollar crypto asset securities fraud.”

If Citadel Securities is able to keep this knowledge secret, “this defense will be substantially impaired,” the document warned.

Terraform has asked for the case to be moved to the U.S. District Court for the Southern District of New York, where Judge Jed Rakoff will rule if the court refuses to order Citadel to reveal the trade records.

As part of its argument, Terraform Labs requested authorization to subpoena material from defunct cryptocurrency exchange FTX in July.

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