2023-10-16
Terraform
Labs filed a document in a
United States District Court in the Southern District of Florida on October 10,
2023 accuses Citadel Securities caused UST stablecoin to depegged.
Terraform
Labs asked the court to compel Citadel Securities LLC to submit documents
related to its trading activities in May 2022, when USTC depegged.
UST
stablecoin lost its peg to the U.S. dollar in May 2022. USD fell from $1 to as low as $0.02 due to third party activity
that triggered the event.
Terraform Labs is asking court to order Citadel Securities to hand over documentation relating to its
trading actions in May 2022.
Quote
“To establish this critical defense,
Movant served Rule 45 subpoenas on Citadel Securities and a related entity,
Citadel Enterprise Americas, LLC (“Citadel Enterprise,” and together with
Citadel Securities, the “Citadel Entities”), seeking certain trading data
related to the May 2022 Depeg. In an effort to minimize the burden on the
Citadel Entities, Movant substantially narrowed the scope of the subpoenas to
focus on the most critical trading data related to the May 2022 Depeg. In
response, the Citadel Entities produced a total of just one document (produced
under the Confidentiality Order in effect in the Underlying Action) from
Citadel Securities, and categorically refused to turn over anything else.
The information that Movant seeks here
from Citadel Securities is limited: documents describing any trading strategy
in any of the Terra-Native Tokens or the Terra Financial Instruments during the
time period March 1, 2022 through May 31, 2022. This information is essential
to Movant’s defense because Movant must determine why the May 2022 Depeg
occurred, whether Citadel Securities participated in the May 2022 Depeg, and
whether Citadel Securities coordinated with others in these efforts to short
UST.
As set forth more fully below, Movant
has pointed to publicly available evidence suggesting that the head of the
Citadel Entities, Ken Griffin, intended to short UST at or about the time of
the May 2022 Depeg. Moreover, as also set forth below, Movant has now obtained
evidence suggesting one Citadel Securities may actually have had a connection
to the May 2022 Depeg – despite the fact that Citadel Securities publicly
denied ever having traded in UST during that depeg event.”
Citadel is a hedge fund founded by Ken
Griffin. In the filing Terraform Labs cites evidence indicate that Ken
Griffin intended to short UST at the same time UST lost its peg in May 2022
which led to the collapse of Terra ecosystem.
Terra Classic (LUNC) is currently 92nd
largest crypto by market cap. Terra Classic’s TVL is $1.51 million.
