Terraform Labs Claims Citadel is linked with the Collapse of its Stablecoin

Terraform Labs has recently made a bold assertion in its ongoing case with the SEC, alleging that Citadel has a hand in its stablecoin collapse in May 2022. This claim has sent shockwaves through the cryptocurrency community.

The Blockchain Company is requesting the judge overseeing the case to approve a motion to compel" Citadel Securities to provide trading data.

Terraform Labs Alleges Citadel Securities' Role in TerraUSD Depegging: Files Motion for Trading Data

On October 10th, Terraform Labs submitted a request in the United States District Court, Southern District of Florida. In the filing, Terra Labs asked Citadel Securities to provide documents regarding their trading activities in May 2022.

In addition, the firm asserts that the sudden TerraUSD Classic USTC depeg from $1 to $0.02 wasn't due to any computer programming issues. Instead, it is a deliberate action from external market participants who bet against the stablecoin.

Terraform said in its motion:

Movant [Terraform] contends that the market destabilization that occurred did not result from instability in the algorithm underlying the UST stablecoin.

Furthermore, Terraform Labs said evidence indicates that Citadel's head, Ken Griffin, planned to short USTC around the depeg time.Notably, the document includes a picture of a conversation between Griffin and an anonymous trader on the Discord platform.

In the conversation, Griffin supposedly said: They were going to Soros the f*** out of Luna UST."Recall that Forbes reported that Citadel Securities has previously denied the claim of trading the TerraUSD stablecoin in May 2022.

Terraform Labs' Defense against SEC Lawsuit Allegations

In its recent motion, Terraform Labs asserted that the documents it's requesting are crucial for its legal defense against the SEC. Recall the SEC's lawsuit claims that Terraform Labs, alongside its founder, Do Kwon, committed crypto assets-related fraud involving billions of dollars.

According to the SEC, Do Kwon participated in orchestrating a multi-billion-dollar crypto asset securities fraud." But Terraform Labs claims Citadel Securities withholding the trading information will substantially impair its defense.

Further, Terraform requested to move the case to the US District Court for the Southern District of New York if the court didn't grant its request to force Citadel to provide the trading documents. In this new location, Judge Jed Rakoff would make the final decision.

In July, Terraform Labs asked a judge for approval to obtain specific information from the bankrupt crypto exchange FTX. The firm believes that this data could be essential for its legal defense.

The filing states, To establish these defenses, TFL needs Debtors' records about wallets, accounts, and assets used to transact on the FTX International and US exchanges and sales/offers of large volumes of cryptocurrencies developed by TFL, if any, by FTX Trading and West Realm Shires Services Inc. d/b/a FTX US."

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