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- 1 Terraform Labs has recently filed at the United States Southern District of Florida Court on October 10, 2023.
- 2 Terraform Labs claims that Citadel Securities was responsible for the fall of UST stablecoin.
- 3 Terraform Labs seeks trading data of Citadel Securities from March 1, 2022, to May 31, 2022.
Beleaguered crypto firm Terraform Labs made a surprising move with the recent filing in the court. The company asked the court to make market maker Citadel Securities to hand over some documents. It argues that there were external factors that played a role in the decline of UST stablecoin after de-pegging and eventually the whole Terra network. The documents, it suggests, can back the claims.
Terraform Labs filed at the United States Southern District of Florida Court on October 10, 2023, asking to compel Citadel Securities to do the needful. In the filing, it asked for the trading data of the company from March 1, 2022 to May 31, 2022. The company believes that the trading activities of the market maker might have something to do with the fall of Terra USD (UST) stablecoin last year.
The argument presented suggests that the de-pegging incident of May 2022, when the asset’s value plummeted from $1 to $0.02, was not due to instability in the algorithm governing the stablecoin.
Instead, the claim is that the de-pegging was the result of “certain third-party market participants” intentionally engaging in short-selling activities, causing the value of the stablecoin to decline significantly. This perspective points to external factors and market manipulation as the primary causes of the de-pegging event.
Terraform argues that the market destabilization that took place was not a consequence of instability in the algorithm that underlies the UST stablecoin, as stated in the firm’s motion. This implies that Terraform attributes the market’s instability to factors other than flaws in the algorithm governing the stablecoin.
Citadel Chief’s Intention to Blow UST Stablecoin?
The motion further references “publicly available evidence” that points to the intention of Ken Griffin, the head of Citadel, to engage in short-selling of the stablecoin around the time of the depeg. This suggests that the motion is making a case based on available information that implicates Ken Griffin’s involvement in shorting the stablecoin during the de-pegging incident.
The motion asserts that there is “publicly available evidence” indicating the intention of Ken Griffin, who leads the Citadel Entities, to engage in short-selling of UST around the time of the May 2022 de-pegging incident. This statement suggests that there is information accessible to the public that points to Ken Griffin’s involvement in shorting the stablecoin during that specific period.
The filing included a screenshot from a Discord channel chat where a pseudonymous trader claimed to have had lunch with Ken Griffin. In this chat, Griffin allegedly mentioned, “They were going to Soros the f*** out of Luna UST,” presumably referring to George Soros’ trading strategies, known for highly leveraged and one-way bets. This information from the chat suggests Griffin’s potential involvement in trading activities related to Luna UST.
Terraform’s motion contends that the documents it is seeking are essential for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) in February. The SEC’s lawsuit alleges that Terraform Labs and its founder, Do Kwon, were involved in “orchestrating a multi-billion dollar crypto asset securities fraud.” It argues that access to these documents is crucial for its defense in this legal case.
The company expresses that its defense in the lawsuit will suffer significant harm if Citadel Securities successfully withholds the limited information in question. This statement underscores the importance of obtaining the requested documents for Terraform’s legal defense.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
