Terraform Labs Alleges Citadel Securities' Role in Stablecoin | Crypto Retro

Terraform Labs Alleges Citadel Securities' Role in Stablecoin Depegging Conspiracy

Terraform Labs, the entity behind Terra (LUNA) and TerraUSD (UST), has accused market maker Citadel Securities of a "concerted, intentional effort" to cause the collapse of its stablecoin in May 2022.

On October 10, Terraform Labs filed a lawsuit with the United States District Court in the Southern District of Florida to call on Citadel to produce documents related to its trading actions around the time its stablecoin TerraUSD (UST) depreciated from $1 to $0.02.

Do Kwon-founded Terraform Labs, alleges that the depeg was the result of "third-party market participants" shorting the stablecoin rather than a flaw in its algorithm.

The firm says in its motion:

"Movant [Terraform] contends that the market was destabilized due to the concerted, intentional effort of certain third-party market participants to "short" and cause UST to depeg from its one dollar price."