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Terraform Labs has filed a lawsuit claiming Citadel Securities was behind its infamous collapse.<\/b><\/p>\n
Terraform Labs, the company behind the collapsed Terra ecosystem, has <\/span>filed a lawsuit<\/span> against market-making firm Citadel Securities.<\/span><\/p>\n The company alleges that the market-maker was behind a ploy that pushed the price of Terra\u2019s UST stablecoin below its $1 peg. The de-peg kickstarted a set of cascading events that saw <\/span>Terra\u2019s $40 billion valued ecosystem wiped out<\/span> in a crazy few weeks for the cryptocurrency market.<\/span><\/p>\n According to the lawsuit filed with the U.S. District Court for the Southern District of Florida, Terraform Labs argues that the collapse of its UST stablecoin was not the result of a failure of the algorithm for minting and distributing the token.\u00a0<\/span><\/p>\n – Advertisement –<\/span><\/p>\n Instead, Terra claimed that the UST market was destabilized by the \u201cconcerted, intentional effort of certain third-party market participants to \u2018short\u2019 and cause UST to depeg from its one-dollar price.\u201d Terraform Labs called out Citadel Securities as the leading market maker behind the malicious move.\u00a0<\/span><\/p>\n To short an asset, an investor acquires and sells the asset at its current market with the hope that the price drops and they can buy it cheaper to repay the loan. A concerted effort by market participants with substantial holdings to short an asset often creates immense selling pressure, something Terra claims Citadel Securities did to the UST price.<\/span><\/p>\n Although the US-based market maker has previously denied the allegations, Terraform\u2019s latest lawsuit presents evidence supporting Citadel\u2019s involvement. Among other things, Terraform cites a Discord chat in which a pseudonymous individual known as GiganticRebirth purportedly disclosed to Citadel CEO Ken Griffin plans to short UST.\u00a0<\/span><\/p>\n Specifically, the Citadel CEO allegedly told the user that \u201cthey [Citadel] were going to Soros the f*** out of luna ust.\u201d <\/span><\/p>\n The reference to Soros evidently alludes to the strategy used by famous fund manager George Soros, placing substantial one-sized bets against an asset using leverage. In essence, Citadel allegedly planned to use the same strategy to bring about Terra\u2019s downfall.<\/span><\/p>\n Additionally, TerraForm Lab cites another popular Jacob Canfield, who added fuel to rumors that Citadel was the culprit behind Terra\u2019s collapse. The trader mentioned a trade in which Citadel borrowed 100,000 BTC to open a short trade against UST.<\/span><\/p>\n Terraform Labs\u2019 lawsuit against Citadel seeks, among other things, to compel the market maker to produce relevant trading data relating to its activities en route to UST\u2019s depeg. Terraform Labs said it has met with little success in acquiring such information.\u00a0<\/span><\/p>\n Citadel has only produced \u201cjust one document,\u201d which does not contain the requested details, the lawsuit alleges. Efforts by Terraform Labs to narrow down the requested data to enhance ease of compliance for Citadel Securities have also proven abortive.<\/span><\/p>\n Terraform Labs hopes that acquiring the data and substantiating its case against Citadel Securities would also help in the <\/span>separate lawsuit with the United States Securities and Exchange Commission (SEC)<\/span>. The regulatory agency had alleged in that case that Terraform Labs made false representations publicly about the stability of UST.\u00a0<\/span><\/p>\n For Terraform Labs, successfully tying the stablecoin\u2019s collapse to Citadel Securities might ease the current legal pressure. Such an outcome might also lead to penalties for the market-making firm and the formulation of <\/span>stronger regulations<\/span> to prevent crypto market manipulation by large financial institutions.<\/span><\/p>\n Follow Us<\/strong> on Twitter and Facebook.<\/span><\/p>\n Disclaimer<\/strong>: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic\u2019s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.<\/p>\n -Advertisement-<\/p>\n<\/div>\n<\/div>\nTerraform\u2019s Allegations<\/h2>\n
Terra Seeks Relevant Trading Data<\/span><\/h2>\n