Citadel Securities Responds to Terraform’s Allegations in Crypto Face-Off

The post Citadel Securities Responds to Terraform’s Allegations in Crypto Face-Off appeared first on Coinpedia Fintech News

The cryptocurrency world watches with bated breath as the billionaire-backed Citadel Securities and embattled Terraform engage in this high-stakes showdown. A lot is riding on the outcome of this clash – not just for the parties involved but for the broader crypto industry. Is this a case of sensational accusations, or is there a concealed truth yet to be uncovered? Let’s uncover the quote-and-unquote layers of this recent development. 

Baseless Conspiracy or Concealed Truth? 

Citadel Securities, the trading firm led by billionaire Ken Griffin, has vehemently refuted allegations leveled by Terraform Labs regarding the collapse of the terraUSD (UST) stablecoin in May of the previous year. 

According to Terraform Labs’ motion, Citadel played a role in the collapse and was significantly involved in jump trading, a claim that Citadel firmly denies. They assert that Terraform’s accusations attempt to divert attention from the legal charges they currently face, including those brought by the U.S. Securities and Exchange Commission (SEC). 

The SEC lawsuit accuses Terraform Labs and founder Do Kwon of a multibillion-dollar crypto asset securities fraud. The move shows Citadel Securities and Enterprise Americas were subpoenaed. It claims third-party shorts caused the May 2022 stablecoin UST to drop from $1 to $0.02. Citadel CEO Ken Griffin’s alleged shorting of UST is also mentioned in court documents.

Citadel’s Response!

In a court filing, Citadel described Terraform’s theory as unfounded and stated that the time frame of the request was irrelevant. The trading firm also dismissed the social media sources cited by Terraform, including an account with the username “Gigantic Rebirth,” as absurd. Citadel clarified that it was only involved in two test transactions with UST, with a total value of around thirteen cents. 

Citadel Securites has responded in scathing fashion to an effort by Do Kwon's lawyers to serve a subpoena on them. Kwon/Terraform Labs are hunting for evidence of a Citadel role in the UST depeg of May 2022, based on tweets from @GiganticRebirth, among other leads pic.twitter.com/vfO1clO0xu

— Alexander Osipovich (@aosipovich) October 26, 2023

But what is more interesting is that they emphasized that Terraform is fully aware that Citadel could not have played the role it is being accused of. Citadel further indicated that the court might consider imposing sanctions on Terraform for abusing the discovery process and suggested that Terraform might have to cover “lost earnings and reasonable attorney’s fees” if a sanction is imposed. The collapse of terraUSD in 2022 had significant repercussions on the cryptocurrency sector, ultimately leading to an extended market downturn. 

What’s at Stake in This High-Stakes Battle?

Citadel says they gave Terraform all the info needed, indicating they weren’t heavily involved in the crypto mess. But here’s the scoop: it’s not as simple as it sounds. Citadel’s swift dismissal of social media posts as nonsense raises questions about the evidence in such tricky cases. While we should avoid crazy conspiracy theories, we also need a solid probe to protect digital currencies.

Now Citadel wants to sue Terraform, which adds more spice to the story. If the court agrees, it could scare firms from obtaining legal counsel in similar instances. Why? Losers may have to pay a lot.