Terraform Labs contends Citadel Securities had a hand in its stablecoin collapse

Do Kwon-founded Terraform Labs has again pointed the digit astatine marketplace shaper Citadel Securities for its relation successful an alleged “concerted, intentional effort” to origin the depeg of its TerraUSD (UST) stablecoin successful 2022.

On Oct. 10, Terraform Labs filed a question successful the United States District Court successful the Southern District of Florida to compel Citadel Securities to nutrient documents relating to its trading actions successful May 2022, astir the clip its stablecoin, present known arsenic TerraUSD Classic (USTC), depegged.

Screenshot from filing from Terraform compelling Citadel to supply further documents. Source: CourtListener

It contends the May 2022 depeg — erstwhile the plus crashed from $1 to $0.02 — was caused by “certain third-party marketplace participants” intentionally shorting the stablecoin alternatively of instability successful its algorithm.

“Movant [Terraform] contends that the marketplace destabilization that occurred did not effect from instability successful the algorithm underlying the UST stablecoin,” said the steadfast successful its motion.

“Instead, Movant contends that the marketplace was destabilized owed to the concerted, intentional effort of definite 3rd enactment marketplace participants to “short” and origin UST to depeg from its 1 dollar price.”

The question besides cites “publicly disposable evidence” suggesting that Citadel caput Ken Griffin intended to abbreviated the stablecoin astir the clip of the depeg.

“There is publically disposable grounds suggesting that the caput of the Citadel Entities, Ken Griffin, intended to abbreviated UST astatine oregon astir the clip of the May 2022 depeg.”

The filing cited a screenshot from a Discord transmission chat successful which a pseudonymous trader had luncheon with Griffin, who allegedly said, “They were going to Soros the f*** retired of Luna UST,” presumably successful notation to George Soros’ trading strategies centered astir highly leveraged, one-way bets.

Citadel Securities has, however, antecedently denied trading the TerraUSD stablecoin successful May 2022, according to Forbes.

Cointelegraph contacted Citadel for further remark but did not person an contiguous response.

Related: Do Kwon says SEC’s extradition petition is impossible

In its motion, Terraform argues that the documents are important for its defence successful the suit filed by the U.S. Securities and Exchange Commission successful February, which alleges Terraform Labs and its founder, Do Kwon, had a manus successful “orchestrating a multi-billion dollar crypto plus securities fraud.”

“This defence volition beryllium substantially impaired if Citadel Securities is palmy successful withholding this constricted information,” it stated.

If the tribunal refuses to compel Citadel to nutrient the trading documents, Terraform requested the substance beryllium transferred to the U.S. District Court for the Southern District of New York for determination by Judge Jed Rakoff.

In July, Terraform Labs sought support from a judge to subpoena information from bankrupt crypto speech FTX, claiming the accusation could assistance its defense.

Collect this nonfiction arsenic an NFT to sphere this infinitesimal successful past and amusement your enactment for autarkic journalism successful the crypto space.

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