Terraform Labs, founded by Do Kwon, has once again pointed fingers at market maker Citadel Securities, alleging a “concerted, intentional effort” in the depegging of its TerraUSD (UST) stablecoin in May 2022.
Background and Allegations
Notably, Terraform Labs submitted a motion to the United States District Court in the Southern District of Florida on October 10. The motion urges the judge to compel Citadel Securities to produce crucial documents related to its trading actions around the time of the stablecoin collapse, now known as TerraUSD Classic (USTC).
Further, the filing highlighted “publicly available evidence” hinting at Citadel head Ken Griffin’s intention to short the stablecoin during the depeg in May 2022.
Discord Chat Revelation
Additionally, a screenshot from a Discord channel chat was presented as evidence. In the conversation, a pseudonymous trader claimed to have had lunch with Griffin, who allegedly expressed plans to “Soros the f*** out of Luna UST.”
This statement, presumably referring to George Soros’ trading strategies, raised concerns about the market manipulation of TerraUSD.
Citadel Securities’ Denial and Legal Implications
Forbes also reported that Citadel Securities had previously denied trading the TerraUSD stablecoin in May 2022. However, Terraform Labs argues that these documents are crucial for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission in February. The lawsuit alleges Terraform Labs and its founder had a role in “orchestrating a multi-billion dollar crypto asset securities fraud.”
Terraform Labs further expressed concern that its defense would be substantially impaired if Citadel Securities successfully withholds the requested information.
Legal Actions and Request for Transfer
If the court refuses to compel Citadel to produce the trading documents, Terraform Labs has requested the matter be transferred to the U.S. District Court for the Southern District of New York. They seek a decision by Judge Jed Rakoff. They further emphasized the importance of this information in their defense against the SEC’s allegations.
In a previous move in July, Terraform Labs had sought permission to subpoena data from bankrupt crypto exchange FTX. They claimed it could further provide valuable information for their defense.
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