In mid-2022, the altcoin Terra (LUNA) ecosystem suffered a catastrophic collapse. Accordingly, $40 billion of investor wealth disappeared. There’s news from Terraform Labs, the entity behind Terra. Accordingly, he made a surprising statement regarding the massive de-pegging of the UST stablecoin. It turns out that this is not due to algorithmic instability. They claim it was due to a deliberate effort by Citadel Securities to cause the stablecoin to lose value.
For altcoin, Terraform Labs points to Citadel Securities
Terraform Labs initiated legal action by filing a petition with the US District Court for the Southern District of Florida on October 10, 2022. This petition seeks to compel Citadel Securities to produce documents related to trading activities in May 2022. Altcoin project Terraform claims that the de-pegging of its stablecoin, whose value dropped by $0.02 from $1, was not a result of algorithmic instability. Instead, the emphasis is on some third-party market participants involved in short-selling the stablecoin. Accordingly, he claims that it was a concerted and deliberate effort by these people. Terraform’s claim argues that the market disruption is not due to any underlying instability in the UST stablecoin’s algorithm.
Additionally, the motion cites “public evidence” showing that Citadel CEO Ken Griffin intended to short the stablecoin during the de-pegging incident in May 2022. There is an interesting detail in the application made by Terraform Labs. Accordingly, they claim that a trader operating under an assumed name was talking to Griffin. This claim is also included in a screenshot from a Discord chat. In the conversation, Griffin references George Soros’ trading strategies, which include high-leverage one-way bets. Accordingly, the altcoin is alleged to have said, “They were going to remove Soros from Luna UST.”
The crash hit the cryptocurrency market
It is worth noting that Citadel Securities previously denied trading the UST stablecoin in May 2022. Some reports have also raised questions about whether Terra founder Do Kwon had prior knowledge of the stablecoin’s collapse. As of now, the Southern District of Florida has not responded to the application filed on October 10.
The legal battle between Terraform Labs and Citadel Securities continues. On the other hand, this sheds light on the events that caused the altcoin Terra’s UST stablecoin to lose significant value. It also promises to have far-reaching implications for the crypto industry. As we previously stated as cryptokoin.com, Terra was effective in the 2022 market crash. However, the next steps will of course not change what happened in 2022. But at least it will shed light on the realities of the collapse process.
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