Citadel Securities Dismisses Terraform Labs’ Claim of Stablecoin Collapse
Citadel Securities, owned by billionaire Ken Griffin, has called the claim by Terraform Labs that it was responsible for the collapse of the stablecoin terraUSD (UST) “ridiculous.” Terraform Labs had filed a motion alleging that Citadel played a major role in one of the largest collapses in the history of the cryptocurrency market. In response, Citadel described the motion as an attempt to deflect attention and labeled the conspiracy theory as baseless. Terraform Labs attributed the UST collapse to social media posts by Citadel, but Citadel dismissed these claims as absurd.
Request to Reject Terraform Labs’ Filing
Citadel stated that it only conducted two test transactions involving UST valued at around thirteen cents. It urged the court to reject Terraform Labs’ filing, arguing that there was no basis for their requests. Citadel also requested appropriate sanctions against Terraform Labs for abusing the discovery process.
The Collapse of the Terra Ecosystem
In May 2022, the price of UST began to fluctuate and deviate from its peg to the dollar. Within 48 hours, the algorithmic stablecoin plummeted from $18 billion to 35 cents. This collapse also caused LUNA, a token designed to stabilize UST, to drop from $80 to just a few cents. Earlier this year, Terraform Labs and its former CEO were charged with fraud and other related crimes by the US Securities and Exchange Commission. The former CEO was also charged with fraud by federal prosecutors after being arrested in Montenegro.
Hot Take: Citadel Securities Denies Responsibility for Stablecoin Collapse
Citadel Securities has vehemently denied any involvement in the collapse of terraUSD (UST) and dismissed Terraform Labs’ claims as baseless. The company argues that the motion filed by Terraform Labs is an attempt to shift blame and distract from their own alleged wrongdoing. Citadel maintains that it only conducted two minor test transactions with UST and urges the court to reject Terraform Labs’ filing. The collapse of the UST stablecoin had significant repercussions, causing a sharp decline in value for both UST and the stabilizing token LUNA. This legal battle highlights the challenges and controversies surrounding stablecoins in the cryptocurrency market.
Insa’s extensive background in the financial realm encompasses roles as a writer, trader, and personal finance coach. Her proficiency spans a wide spectrum, ranging from commodities and indices to forex and cryptocurrencies. Insa’s specialization lies in furnishing strategic investment advice tailored to the fintech investment niche.