Skip to main content
Crypto NewsCrypto ProjectsTrending article

Terraform Labs Blames Citadel Securities For UST Collapse

By October 13, 2023No Comments3 min read
October 13 2023 Terraform Labs Blames Citadel Securities For UST Collapse


Terraform Labs has recently made allegations against Citadel Securities, suggesting that the latter played a significant role in the collapse of its TerraUSD (UST) stablecoin in 2022.

October 13 2023 Terraform Labs Blames Citadel Securities For UST Collapse


In May 2022, Terraform Labs’ stablecoin, known as TerraUSD Classic (USTC), experienced a drastic depegging, where its value plummeted from $1 to a mere $0.02. The company has since been adamant that this depegging was not due to any instability in its algorithm. Instead, they believe that “certain third-party market participants” intentionally shorted the stablecoin, leading to its devaluation.

Allegations Against Citadel Securities

Terraform Labs has pointed fingers at market maker Citadel Securities, accusing them of a “concerted, intentional effort” to cause the depegging of its TerraUSD stablecoin. On October 10, Terraform Labs filed a motion in the United States District Court in the Southern District of Florida. Through this motion, they sought to compel Citadel Securities to produce documents related to its trading actions around the time of the depegging.

October 13 2023 Terraform Labs Blames Citadel Securities For UST Collapse

Furthermore, Terraform Labs has presented “publicly available evidence” suggesting that Ken Griffin, the head of Citadel Securities, had intentions to short the stablecoin around the time of its depegging. This evidence includes a screenshot from a Discord channel chat where a trader claimed to have had lunch with Griffin. During this alleged meeting, Griffin supposedly remarked, “They were going to Soros the f*** out of Luna UST,” possibly alluding to George Soros’ trading strategies.

October 13 2023 Terraform Labs Blames Citadel Securities For UST Collapse

However, it’s worth noting that Citadel Securities has previously denied any involvement in trading the TerraUSD stablecoin during that period.

Citadel Securities Fined Recently for market manipulation:

South Korea’s financial regulator, the Financial Services Commission (FSC), has fined U.S.-based Citadel Securities 11.88 billion won (approximately $9.66 million). The fine was imposed because the regulator believes that Citadel Securities disrupted the local stock market through high-frequency algorithm trading according to this Reuters article.

The FSC stated that Citadel Securities distorted stock prices using artificial factors, such as placing orders on the “immediate or cancel” condition and by filling gaps in bid prices. The firm reportedly engaged in such trading practices on an average of 1,422 stocks daily from October 2017 to May 2018, amounting to over 500 billion won worth of trades.

Citadel Securities expressed surprise and concern regarding the regulator’s findings, especially since they were not invited to certain hearings and were not privy to specific expert evidence.

October 13 2023 Terraform Labs Blames Citadel Securities For UST Collapse

Implications for Terraform Labs

These allegations and the subsequent motion come at a crucial time for Terraform Labs. The U.S. Securities and Exchange Commission filed a lawsuit against them in February, accusing the company and its founder, Do Kwon, of “orchestrating a multi-billion dollar crypto asset securities fraud.” Terraform Labs argues that the documents from Citadel Securities are vital for their defence in this lawsuit. They believe their defence would be significantly hampered if Citadel Securities withholds this information.

If the court does not compel Citadel to produce the requested trading documents, Terraform Labs has requested that the matter be transferred to the U.S. District Court for the Southern District of New York for a decision by Judge Jed Rakoff.

This is an ongoing story and here at we will keep you up to date on the latest and greatest things crypto!


With over 7 years of hands-on experience as a crypto investor and an additional 12 years observing the industry, I've witnessed the evolution of the crypto landscape firsthand. My journey has been marked by significant successes, but not without its fair share of learning experiences. I'm eager to impart my insights to you, helping you navigate this space without repeating the missteps I encountered.

Leave a Reply

Portfolio We would like to show you notifications for the latest news and updates.
Allow Notifications