Terraform Labs Accuses Citadel Securities of Manipulating Stablecoin Depegging
Terraform Labs, led by Do Kwon, has once again accused Citadel Securities of intentionally causing the depegging of its TerraUSD (UST) stablecoin in 2022. In an attempt to obtain evidence, Terraform filed a motion in a Florida court to compel Citadel Securities to release documents related to its trading activities during the depegging period. Terraform claims that the depegging was not due to algorithmic instability but was a deliberate move by certain market participants who engaged in short-selling the stablecoin, causing its value to plummet. The motion also cites “publicly available evidence” suggesting that Citadel CEO Ken Griffin planned to short the stablecoin during this time.
Citadel Securities Denies Involvement, Allegations Against Terra’s Founder
Citadel Securities has previously denied any involvement in trading the UST stablecoin during the depegging period. However, there have been reports suggesting that Terra’s founder, Do Kwon, may have had prior knowledge of the stablecoin’s collapse. Terraform’s motion highlights the significance of obtaining documents from Citadel Securities to defend against a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) in February. The SEC lawsuit accuses Terraform Labs and Do Kwon of orchestrating a multi-billion dollar crypto asset securities fraud. Terraform argues that its defense would be severely weakened if Citadel Securities succeeds in withholding the requested information.
Terraform’s Request for Court Intervention
If the Florida court declines to compel Citadel Securities to release the requested documents, Terraform has requested that the case be transferred to the U.S. District Court in New York for a decision by Judge Jed Rakoff. The outcome of this legal battle will have significant implications for the allegations against Citadel Securities and the defense of Terraform Labs and Do Kwon.
Hot Take: Terraform Labs Seeks to Uncover Alleged Manipulation by Citadel Securities
Terraform Labs is taking legal action to uncover evidence of alleged deliberate manipulation by Citadel Securities in the depegging of its stablecoin. The motion filed by Terraform accuses certain market participants, including Citadel CEO Ken Griffin, of engaging in short-selling activities that caused the stablecoin’s value to collapse. While Citadel Securities denies involvement, Terraform emphasizes the importance of obtaining documents from the company to defend against a securities fraud lawsuit filed by the SEC. The outcome of this legal battle will determine whether Terraform’s defense is weakened or strengthened. If successful, Terraform’s request for court intervention could transfer the case to New York for further examination. This case highlights the ongoing challenges and controversies surrounding stablecoins in the crypto industry.
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