Terraform Labs Accuses Citadel Securities of Destabilizing TerraUSD Classic
In a recent development, Terraform Labs, a defunct crypto network, has accused Citadel Securities of intentionally destabilizing its stablecoin TerraUSD classic (USTC) in 2022, leading to its downfall. Both Terraform Labs and its founder, Do Kwon, are currently facing legal troubles.
Terraform Labs Files Document against Citadel Securities
Terraform Labs has filed a document in a United States District Court in the Southern District of Florida, requesting Citadel Securities LLC to produce documents related to its trading activities during the time USTC depegged in May 2022. USTC experienced a significant drop in value, losing nearly 70% of its peg within hours and eventually crashing to $0.02 later that month. Terraform now alleges that this plunge was primarily caused by certain third-party market participants rather than algorithmic instability.
Evidence of Citadel’s Involvement
Terraform’s documentation refers to “publicly available evidence” suggesting that Ken Griffin, the head of Citadel Securities, planned to short the stablecoin around that time. The evidence includes a Discord chart where an anonymous individual claimed that Griffin intended to use George Soros’ trading strategies on Luna UST. Additionally, a Twitter user named @JacobCanfield alleged that Citadel was responsible for the instability of UST by borrowing 100K BTC and opening a short position on it.
Past Subpoenas and Ongoing Cases
Previously, Terraform Labs sought court permission to obtain data from FTX exchange to support its case. Meanwhile, Do Kwon, the founder of Terraform Labs, is facing legal charges for multi-billion dollar fraud. He was imprisoned in Montenegro for four months for forgery of travel documents and is now facing more significant legal issues in the U.S. and South Korea.
Hot Take: Terraform Labs Alleges Citadel Securities’ Role in Destabilizing TerraUSD Classic
Terraform Labs has accused Citadel Securities of intentionally destabilizing its stablecoin, TerraUSD classic (USTC), leading to its downfall. The defunct crypto network filed a document requesting Citadel Securities to produce documents related to its trading activities during the depegging of USTC in May 2022. Terraform claims that the plunge in USTC’s value was caused by certain third-party market participants rather than algorithmic instability. Evidence, including a Discord chart and tweets from anonymous individuals, suggests Citadel’s involvement. These allegations come amidst ongoing legal troubles faced by Terraform Labs and its founder, Do Kwon. As the case unfolds, it remains to be seen how it will impact the crypto industry and the stability of stablecoins.
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