Revealing the Identity of UST De-Peg's Mastermind: Terraform's Latest Filing

Terra (LUNA) Ecosystem Faces Collapse

Last year, the Terra (LUNA) ecosystem experienced a significant collapse, resulting in a loss of $40 billion for investors. However, Terraform Labs, the company behind Terra, claims that the collapse was not due to algorithmic failure but rather a deliberate effort by Citadel Securities to devalue the UST stablecoin.

Terraform Labs Files Motion Against Citadel Securities

Terraform Labs has filed a motion in the U.S. District Court for the Southern District of Florida, seeking documents from Citadel Securities regarding its trading actions in May 2022. The motion alleges that certain third-party market participants, including Citadel Securities, engaged in short-selling the stablecoin, causing its detachment from its peg and subsequent depreciation.

Citadel Securities Accused of Shorting USDT

Terraform Labs’ motion also references publicly available evidence suggesting that Citadel CEO Ken Griffin had intentions to short the stablecoin during the de-peg period. A screenshot from a Discord chat is included as evidence of a conversation where Griffin allegedly mentioned plans to “Soros the f*** out of Luna UST,” referring to George Soros’ trading strategies.

Despite Citadel Securities denying involvement in trading the UST stablecoin in May 2022, Terra’s filing raises questions about their role in the collapse. There are also reports suggesting that Terra’s founder Do Kwon may have been aware of the impending collapse. The Southern District of Florida has yet to respond to Terraform Labs’ motion.

Hot Take: Terra Blames Citadel Securities for Stablecoin Collapse

The collapse of the Terra ecosystem and devaluation of its UST stablecoin is being attributed to a deliberate effort by certain market participants, including Citadel Securities, according to Terraform Labs. The company has filed a motion seeking documents from Citadel Securities to support its claims. If proven true, this would raise concerns about market manipulation and the stability of stablecoins. It remains to be seen how the court will respond to Terraform Labs’ motion and what implications it may have for the crypto industry as a whole.