One of the most shocking downfalls in the cryptocurrency industry was the collapse of Terraform Labs. The company blames Citadel Securities for the demise of UST coins issued by Terraform Labs. In a recent court filing, Terraform alleges that Citadel is responsible for this downfall.
Reason Behind the Allegation
Terraform Labs, in its court filing, claims that Citadel Securities should comply with their demands or transfer the ongoing trial to the Southern District of New York. The company presents arguments to support its allegation against Citadel.
Arguments Presented By Terraform Labs
In one argument, Terraform states that Citadel Securities should produce relevant documentation related to its trading activity in May 2022. This is crucial because it was during this time that the UST stablecoin lost its peg. The records are essential to Terraform’s defense against the SEC’s lawsuit accusing them of securities fraud.
The motion also reveals that subpoenas were served to Citadel Securities and Citadel Enterprise Americas. Terraform alleges that third-party participants intentionally shorted the stablecoin, causing its value to plummet from $1 to $0.02 in May 2022.
“Movant [Terraform] contends that the market destabilization that occurred did not result from instability in the algorithm underlying the UST stablecoin. Instead, Movant contends that the market was destabilized due to the concerted, intentional effort of certain third-party market participants to ‘short’ and cause UST to depeg from its one dollar price.”
Can it be a ‘Soros Style’ Attack?
Court documents mention rumors about Citadel CEO Ken Griffin attempting to short the UST stablecoin. A trader on Discord claimed that Griffin discussed plans to “soros” Luna UST. Some observers believe that the de-pegging of UST was a strategic attack similar to those orchestrated by George Soros.
Terraform Labs requests Citadel to provide documents describing any trading strategy related to Terra-Native Tokens or Terra Financial Instruments between March 1, 2022, and May 31, 2022.
Alternative Measure
If the motion to compel Citadel Securities is not accepted, Terraform Labs requests that the case be transferred to the Southern District of New York as an alternative measure.
Hot Take: Citadel Securities Accused of Causing Downfall of Terraform Labs’ UST Coins
Terraform Labs has alleged that Citadel Securities is responsible for the collapse of UST coins issued by Terraform Labs. They argue that Citadel intentionally shorted the stablecoin, causing it to lose its peg. The company has requested relevant documentation from Citadel to support their defense against the SEC’s lawsuit accusing them of securities fraud. Rumors about Citadel CEO Ken Griffin attempting to short UST have also surfaced. This situation raises questions about whether the de-pegging of UST was a strategic attack. If their demands are not met, Terraform Labs seeks to transfer the ongoing trial to the Southern District of New York as an alternative measure.
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