Last 12 months in mid-2022, the Terra (LUNA) ecosystem confronted a brutal collapse eroding $40 billion of traders’ cash. In an attention-grabbing revelation, Terraform Labs mentioned that the large de-peg of its UST stablecoin wasn’t an algorithmic failure. Instead, it blames Citadel Securities for its position in a “concerted, intentional effort” to trigger the depreciation of the stablecoin.
Terraform Labs Blames Citadel Securities
Earlier this week on October 10, Terraform Labs filed a movement in the U.S. District Court for the Southern District of Florida. The movement seeks to compel Citadel Securities to provide paperwork referring to its buying and selling actions in May 2022.
Terraform claims that the detachment of its stablecoin from its peg in May 2022, leading to a drop from $1 to $0.02, was a deliberate act by “certain third-party market participants” who engaged in short-selling the stablecoin, slightly than stemming from algorithmic instability. The firm’s movement asserts that the market disruption was not on account of any instability inside the UST stablecoin’s underlying algorithm. The submitting notes:
“Instead, Movant contends that the market was destabilized due to the concerted, intentional effort of certain third party market participants to “short” and trigger UST to depeg from its one greenback value.”
Citadel Securities Was Shorting USDT
Furthermore, the movement references “publicly available evidence” that implies Citadel CEO Ken Griffin had intentions to quick the stablecoin throughout the interval of the de-peg in May 2022.
The submitting from Terraform features a screenshot from a chat inside a Discord channel the place a dealer, working underneath a pseudonym, claimed to have had a dialog with Griffin. According to the chat, Griffin allegedly talked about, “They were going to Soros the f*** out of Luna UST,” presumably alluding to the buying and selling methods of George Soros, which contain closely leveraged one-directional bets.
However, Citadel Securities had beforehand denied buying and selling the UST stablecoin in May 2022. Some experiences additionally recommended that Terra’s disgraced founder Do Kwon knew about the stablecoin collapse beforehand. The Southern District of Florida has not but issued a response to the submission made on October tenth.
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