Terraform Labs contends Citadel Securities had a hand in its stablecoin collapse
Do Kwon-founded Terraform Labs has again pointed the finger at market maker Citadel Securities for its role in an alleged “concerted, intentional effort” to cause the depeg of its stablecoin in 2022.
On Oct. 10, Terraform Labs filed a motion in the United States District Court in the Southern District of Florida to compel Citadel Securities LLC to produce documents relating to its trading actions in May 2022, around the time its stablecoin, now known as TerraUSD Classic (USTC), depegged.
It contends the May 2022 depeg, when the asset crashed from $1 to $0.02, was caused by “certain third-party market participants” intentionally shorting the stablecoin, as opposed to instability in its algorithm.
“Movant [Terraform] contends that the market destabilization that occurred did not result from instability in the algorithm underlying the UST stablecoin,” said the firm in its motion.
“Instead, Movant 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.”
The motion also cites “publicly available evidence” suggesting that Citadel head Ken Griffin intended to short the stablecoin around the time of the depeg.
“There is 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.”
The filing cited a screenshot from a Discord channel chat in which a pseudonymous trader had lunch with Griffin, who allegedly said “They were going to Soros the f*** out of Luna UST,” presumably in reference to George Soros’ trading strategies — centered around highly leveraged, one-way bets.
Citadel Securities has however previously denied trading the TerraUSD stablecoin in May 2022, according to Forbes.
Cointelegraph contacted Citadel for additional comment but did not receive an immediate response.
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In its motion, Terraform argues that the documents are crucial for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission in February, which alleges Terraform Labs and its founder, Do Kwon, had a hand in “orchestrating a multi-billion dollar crypto asset securities fraud.”
“This defense will be substantially impaired if Citadel Securities is successful in withholding this limited information,” it stated.
If the court refuses to compel Citadel to produce the trading documents, Terraform requested the matter be transferred to the U.S. District Court for the Southern District of New York for decision by Judge Rakoff.
In July, Terraform Labs sought permission from a judge to subpoena data from bankrupt crypto exchange FTX, also claiming the information could help its defense.
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Ex-Tory chairman Sir Jake Berry has defected to Reform, in the latest blow to the Conservatives.
The former MP for Rossendale and Darwen, who served as Northern Powerhouse minister under Boris Johnson and lost his seat last year, said he had defected to Nigel Farage’s party because the Tories had “lost their way”.
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Reform UK confirmed the defection to Sky News, which was first broken by The Sun.
Speaking to the paper, Sir Jake said Mr Farage’s party was the “last chance to pull Britain back from terminal decline”.
“Our streets are completely lawless,” he said.
“Migration is out of control. Taxes are going through the roof.
“And day after day, I hear from people in my community and beyond who say the same thing: ‘This isn’t the Britain I grew up in’.”
Sir Jake accused his former party of “abandoning the British people” but said he was not “giving up”.
“I’m staying. And I’m fighting.
“Fighting for the Britain I want my kids, and one day, my grandkids, to grow up in.”
Mr Farage welcomed what he said was “a very brave decision” by Sir Jake.
“His admission that the Conservative government he was part of broke the country is unprecedented and principled,” he added.
A Conservative Party spokesman said: “Reform support increasing the benefits bill by removing the two-child cap, and nationalising British industry. By contrast the Conservatives, under new leadership, will keep making the case for sound money, lower taxes and bringing the welfare bill under control.
“We wish Jake well in his new high spend, high tax party.”
Sir Jake’s defection to Reform comes just days after former Conservative cabinet minister David Jones joined Reform UK, which continues to lead in the polls.
Former Welsh secretary David Jones (R) alongside Tory MP Mark Francois. Pic: PA
Mr Jones, who was MP for Clwyd West from 2005 until standing down in 2024, said he had quit the Tories after “more than 50 years of continuous membership”.
Sir Jake was the MP Rossendale and Darwen in Lancashire between 2010 and 2024, when he was defeated by Labour’s Andy MacNae.
He held several ministerial posts including in the Department for Housing, Communities and Local Government, Energy and Climate Change and the Cabinet Office.
Nigel Farage after winning the Runcorn and Helsby by-election.
Pic: Reuters
He was also chairman of the Conservative Party from September to October 2022, under Liz Truss.
Announcing his defection – which comes a year after the Tories suffered their worst ever election defeat – Sir Jake said “Britain was broken” and “the Conservative governments I was part of share the blame”.
“We now have a tax system that punishes hard work and ambition,” he said.
“Just this week, we saw record numbers of our brightest and best people leaving Britain because they can’t see a future here. At the same time, our benefits system is pulling in the world’s poor with no plan for integration and no control over who comes in.
“If you were deliberately trying to wreck the country, you’d be hard-pressed to do a better job than the last two decades of Labour and Tory rule.
“Millions of people, just like me, want a country they can be proud of again. The only way we get that is with Reform in government. That’s why I’ve resigned from the Conservative Party. I’m now backing Reform UK and working to make them the next party of government.”
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He added: “And with Nigel Farage leading Reform, we’ve got someone the country can actually trust. He doesn’t change his views to fit the mood of the day. And people respect that. So do I. That’s why I believe he should be our next prime minister.”
A Labour Party spokesperson said: “Not content with taking advice from Liz Truss, Nigel Farage has now tempted her Tory Party chairman into his ranks.
“It’s clear Farage wants Liz Truss’s reckless economics, which crashed our economy and sent mortgages spiralling, to be Reform’s blueprint for Britain. It’s a recipe for disaster and working people would be left paying the price.”
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