According to Terraform Labs, Citadel Securities was involved in the collapse of its stablecoin.

Terraform Labs has implored the presiding judge to grant its motion, compelling Citadel Securities to disclose their trading data. Terraform alleges that Citadel Securities played a pivotal role in the catastrophic depegging incident of USTC in May 2022.

Terraform Labs, under the leadership of Do Kwon, once again points an accusatory finger at Citadel Securities, alleging their participation in a coordinated and intentional scheme that led to the depegging of TerraUSD (UST) stablecoin in 2022.

On the 10th of October, Terraform Labs initiated legal action by filing a motion in the United States District Court in the Southern District of Florida, seeking the disclosure of documents pertaining to Citadel Securities’ trading activities in May 2022, during the critical period when TerraUSD Classic (USTC) lost its peg.

Terraform Labs argues that the depegging disaster of May 2022, when the asset plummeted from $1 to $0.02, was not the result of algorithmic instability but rather the deliberate actions of certain third-party market participants who engaged in short selling with the intent to destabilize the market.

“In our motion,” Terraform asserts, “we contend that the market turmoil did not stem from instability within the UST stablecoin’s algorithm. Instead, we firmly assert that the market’s destabilization was a direct consequence of a deliberate and coordinated effort by certain third-party market participants to short the stablecoin, thereby causing it to depeg from its one-dollar valuation.”

The motion additionally references “publicly available evidence” hinting at Citadel’s head, Ken Griffin, harboring intentions to short the stablecoin around the time of its depeg.

“The public record provides substantial evidence suggesting that Ken Griffin, the head of Citadel Entities, had intentions to engage in short selling of UST at or around the time of the May 2022 depeg.”

The motion includes a screenshot from a Discord channel chat, in which an anonymous trader purportedly had a conversation with Griffin. In this chat, Griffin allegedly remarked, “They were going to Soros the f*** out of Luna UST,” presumably alluding to George Soros’ trading strategies that revolve around highly leveraged, one-way bets.

Forbes, however, has previously reported that Citadel Securities denied involvement in trading the TerraUSD stablecoin in May 2022.

Within their motion, Terraform emphasizes the critical importance of these documents for their defense in the lawsuit initiated by the U.S. Securities and Exchange Commission in February. This lawsuit accuses Terraform Labs and its founder, Do Kwon, of being involved in an “orchestrated multi-billion-dollar crypto asset securities fraud.”

The motion underscores, “Our ability to mount a robust defense will be significantly compromised if Citadel Securities succeeds in withholding this limited information.”

In the event that the court declines to compel Citadel to furnish the trading documents, Terraform requests the transfer of the matter to the U.S. District Court for the Southern District of New York, for adjudication by Judge Jed Rakoff.

In July, Terraform Labs sought the court’s permission to subpoena data from the now-bankrupt crypto exchange, FTX, arguing that this information could bolster their defense.