Terraform Labs Accuses Citadel Securities of Collapsing TerraUSD
Terraform Labs, the entity behind Terra (LUNA) and TerraUSD (UST), has accused market maker Citadel Securities of intentionally causing the collapse of its stablecoin in May 2022. Terraform Labs filed a lawsuit with the United States District Court in Florida, demanding that Citadel produce documents related to its trading actions during the devaluation of TerraUSD from $1 to $0.02. The company claims that third-party market participants orchestrated a shorting campaign to destabilize the stablecoin. Terraform believes this evidence is crucial for its defense against the US Securities and Exchange Commission’s lawsuit.
Terraform Uncovers Possible Connection with Citadel Securities
Terraform has also uncovered evidence suggesting a potential connection between Citadel Securities and the May 2022 depegging event, despite Citadel Securities denying involvement. The company referenced a Discord chat screenshot where a trader claimed to have had lunch with Citadel CEO Ken Griffin. The trader suggested that Griffin intended to “Soros the f*** out of Luna UST,” referring to George Soros’ strategies of highly leveraged bets on rising or falling values. However, the court still needs to respond to Terraform’s filing.
SEC Files Multi-Billion Dollar Lawsuit Against Terraform Labs
In February, the SEC filed a lawsuit against Terraform Labs and founder Do Kwon, accusing them of engaging in a multi-billion-dollar crypto asset securities fraud. The SEC alleges that Terraform offered unregistered securities through its stablecoin and token. This resulted in over $40 billion in losses within the crypto markets. In response, Terraform requested information about wallets used by Jump Trading, which the SEC accused of collaborating with Terraform in manipulating the UST stablecoin’s price.
Hot Take: Terraform Labs vs. Citadel Securities Lawsuit
The legal battle between Terraform Labs and Citadel Securities intensifies as Terraform accuses Citadel of intentionally causing the collapse of its stablecoin, TerraUSD. The lawsuit demands documents related to Citadel’s trading actions during the devaluation. Additionally, Terraform uncovers potential evidence connecting Citadel Securities to the event, despite their denial. This ongoing legal dispute highlights the challenges faced by crypto companies in maintaining stability and defending against market manipulation allegations. The outcome of this case could have significant implications for the future regulation of stablecoins and the accountability of market participants.
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