Did Citadel Securities Play a Role in the Crash of TerraUSD Stablecoin?
According to Do Kwon’s Terraform Labs, Citadel Securities may have played a significant role in the crash of its TerraUSD (UST) stablecoin in May 2022. In a recent filing, Terraform is requesting that Citadel provide key trading data associated with UST’s collapse, during which its value dropped from $1 to $0.02. Terraform argues that certain market participants intentionally destabilized its stablecoin by triggering the de-pegging event. The filing cites “publicly available evidence” suggesting that Citadel CEO Ken Griffin planned to short UST around the time of the collapse.
Terraform’s Defense in SEC Lawsuit Relies on Citadel’s Trading Data
Terraform claims that Citadel’s trading data is crucial for its defense against the US Securities and Exchange Commission (SEC), which has accused Do Kwon of orchestrating a multi-billion dollar crypto asset securities fraud. The company argues that if Citadel withholds this information, it will significantly impair their defense. However, Citadel has denied any involvement in trading Terraform’s UST during the crash. A spokesperson for the company stated that “Citadel Securities does not trade stablecoins, including UST.”
The Significance of the TerraUSD Crash and SEC Lawsuit
The crash of TerraUSD in May 2022 had a major impact on the Terra Network, which was previously a rapidly growing crypto ecosystem with an $18 billion market cap. The network operated TerraUSD as an algorithmic stablecoin and LUNA as a companion digital token. The SEC’s lawsuit against Terraform and Do Kwon seeks to establish their liability for their actions during this significant collapse.
Hot Take: Allegations Against Citadel Could Have Far-Reaching Consequences
The allegations made by Terraform Labs against Citadel Securities regarding the crash of TerraUSD are serious and could have far-reaching consequences. If it can be proven that Citadel intentionally destabilized the stablecoin, it would raise questions about the integrity and trustworthiness of major market participants. Additionally, the outcome of this case could have implications for the regulation and oversight of stablecoins in the future. The involvement of a prominent hedge fund figure like George Soros, as mentioned in the Discord chat screenshot, adds another layer of intrigue to this unfolding story.
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.