Do Kwon-founded Terraform Labs has once again pointed the finger at market maker Citadel Securities for its role in an alleged “concerted and deliberate effort” to cause the depegging of its stablecoin in 2022.
On October 10, Terraform Labs foot Motion in U.S. District Court for the Southern District of Florida to compel Citadel Securities LLC to produce documents related to its trading actions in May 2022, at the time its stablecoin, now known as TerraUSD Classic (USTC), was unpegged.
It claims that the May 2022 demonetization, when the asset collapsed from $1 to $0.02, was caused by “certain third-party market participants” who intentionally shorted the stablecoin, rather than instability in its algorithm.
“Moving [Terraform] “It confirms that the market destabilization that occurred was not a result of the instability of the algorithm behind the UST stablecoin,” the company said in its motion.
“Instead, Movant asserts that the market has been destabilized by concerted and deliberate efforts by certain third-party market participants to ‘short sell’ and cause the UST to unpeg to the $1 price.”
The motion also cites “publicly available evidence” suggesting that Citadel Chairman Ken Griffin intended to short the stablecoin around the time of the breakup.
“There is publicly available evidence indicating that the president of the Citadel Entities, Ken Griffin, intended to short the UST at the time of the delinking in May 2022 or about that time.”
The filing cited a screenshot of a Discord channel chat in which a pseudonymous trader had lunch with Griffin, who allegedly said “they were going to Soros out of Luna UST,” likely a reference to George Soros’ trading strategies — centered around high-leverage bets in… One-way.
However, Citadel Securities previously denied trading the TerraUSD stablecoin in May 2022, according to the Citadel Securities website. Forbes.
Cointelegraph contacted Citadel for additional comment but did not receive an immediate response.
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Terraform says in its filing that the documents are necessary for its defense in the SEC’s lawsuit filed in February, which alleges that Terraform Labs and its founder, Do Kwon, had a hand in “structuring a multibillion-dollar operation.” Cryptoassets Securities Fraud.”
“This defense would be substantially weak if Citadel Securities succeeded in withholding this limited information,” the statement read.
If the court declines to compel Citadel to produce the trading documents, Terraform has requested that the matter be transferred to the U.S. District Court for the Southern District of New York for a decision by Judge Rakoff.
In July, Terraform Labs asked a judge for permission to subpoena data from bankrupt cryptocurrency exchange FTX, also claiming that the information could help in its defense.
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