Terraform Labs argues that Citadel Securities had a hand in the stablecoin collapse.

Do Kwon also pointed the finger at market maker Citadel Securities for its alleged role in a “coordinated, deliberate effort” to create the TerraUSD (UST) stablecoin, which Kwon founded in 2022.

On Oct. 10, Terraform Labs filed a lawsuit in the U.S. District Court for the Southern District of Florida to compel Citadel Securities to release documents related to its business activities in May 2022. USTC), modified.

Depeg contends that the May 2022 crash — when the asset crashed from $1 to $0.02 — was caused by “certain third-party market participants” intentionally shorting a stable coin rather than algorithmically destabilizing it.

“The movant [Terraform] He explained that the resulting market volatility did not cause instability in the algorithm underlying the UST stablecoin.

“Instead, Movant asserts that the market was destabilized by a concerted and deliberate effort by certain third-party market participants to devalue the UST to the dollar,” Movant said.

Citadel's head of the movement, Ken Griffin, cited “publicly available evidence” suggesting they intended to short the stablecoin during the DEPEG period.

“Publicly available information indicates that Citadel head Ken Griffin intends to cut UST in or around the May 2022 season.”

The filing cited a screenshot from a Discord channel chat in which an anonymous trader had lunch with Griffin, who said, “They went from Luna UST to Soros the f*** out of Luna UST,” possibly referring to George Soros' trading strategies. Centered around high leverage, one-way bets.

Citadel Securities, however, previously banned trading of the TerraUSD stablecoin in May 2022, Forbes reported.

Cointelegraph reached out to Citadel for further comment but did not receive an immediate response.

Related: Do Kwon Says SEC Extradition Request Impossible

In a motion filed by Terraform, it argued that the documents are critical to its defense in a February filing by the U.S. Securities and Exchange Commission alleging that Terraform Labs and its founder, Do Kwon, “were involved in orchestrating a multibillion-dollar crypto-asset securities fraud.”

“If Citadel Securities succeeds in obtaining this limited information, this defense will be significantly compromised,” he said.

If the court refuses to compel Citadel to produce the commercial documents, Terraform has asked Judge Jed Rakoff of the U.S. District Court for the Southern District of New York for a ruling.

In July, Terraform Labs asked a judge for permission to subpoena information from bankrupt crypto exchange FTX, saying the information could help its defense.

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