Terraform Labs Accuses Citadel Securities of Manipulating Stablecoin Value
Summary:
Terraform Labs, led by Do Kwon, has accused Citadel Securities of a deliberate attempt to devalue its stablecoin in 2022. The company has asked a US District Court to force Citadel to reveal documents linked to its trading activities from May 2022, during the stablecoin's drastic devaluation. Terraform Labs claims that the market disruption was due to third parties shorting the stablecoin, rather than algorithmic instability. If documentation is not provided, Terraform Labs seeks to transfer the case to the Southern District of New York.
Terraform Labs, founded by Do Kwon, is once again accusing market maker Citadel Securities of intentionally aiming to devalue its stablecoin in 2022. Terraform Labs took legal action on October 10, urging the United States District Court in the Southern District of Florida to demand Citadel Securities LLC to unveil documents associated with its trading activities in May 2022. This period coincides with the plummet of their stablecoin, currently known as TerraUSD Classic (USTC), from its standard peg. The company argues that external market actors deliberately initiated a "sell-off," causing the stablecoin's crash from $1 to $0.02, instead of any issues with its algorithm. Terraform Labs claims that third party actors intentionally destabilized the market, prompting the stablecoin to veer off its one-dollar value. According to the complaint, Ken Griffin, head of Citadel, purportedly planned to destabilize the stablecoin around the same time. The document indicates that comments from a Discord discussion suggest that Griffin had intentions of using aggressive, one-sided trading methods similar to those of George Soros. Despite these allegations, Citadel Securities has previously stated that it played no part in the trading of TerraUSD in May 2022, as reported by Forbes. Citadel did not immediately comment when approached by Cointelegraph. Terraform Labs asserts that these records are vital to their defense against the U.S. Securities and Exchange Commission's claims of a "multi-billion dollar crypto asset securities fraud," which implicated Terraform Labs and its founder, Do Kwon. The company has warned that if Citadel successfully restricts access to this information, it will significantly impair their defense. Terraform Labs has requested that the case be transferred to the U.S. District Court for the Southern District of New York and placed under the jurisdiction of Judge Rakoff if these documents are not produced. Additionally, Terraform Labs previously sought approved to subpoena information from the now-defunct crypto exchange FTX in July, claiming this information would be beneficial to their defense.
Published At
10/13/2023 4:57:11 AM
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