Terraform Labs, led by Do Kwon, accuses market maker Citadel Securities of intentionally destabilizing its stablecoin, TerraUSD Classic (USTC). The firm alleges that Citadel Securities was involved in a deliberate effort to force USTC to depeg from its $1 peg in May 2022.
Motion to Compel Trading Data
Terraform Labs has formally filed a motion in the United States District Court in the Southern District of Florida, urging the production of documents from Citadel Securities. The documents in question pertain to trading actions surrounding the time USTC collapsed from $1 to just $0.02. Terraform's stance is that this drop was due to intentional shorting activities, not algorithmic instabilities.
Evidence Implicating Citadel’s Ken Griffin
The motion cites public evidence suggesting that Ken Griffin, the head of Citadel, planned to short the stablecoin during its depeg. An excerpt from a Discord channel chat reveals a conversation where Griffin allegedly spoke about making a massive bet against Luna UST, drawing parallels with George Soros' famed trading tactics.
Citadel's Denial and Terraform's Legal Battle
Although Citadel Securities rebuffed claims of trading the TerraUSD stablecoin, Terraform Labs insists the evidence is vital for its defense. Terraform is currently under the legal microscope, with the U.S. SEC accusing it of a multi-billion dollar crypto fraud. If Citadel remains tight-lipped on the document requests, Terraform wishes to transfer the case to the Southern District of New York.
