Terra Says This Market Maker Was Behind Its $40 Billion Collapse
The post Terra Says This Market Maker Was Behind Its $40 Billion Collapse appeared on BitcoinEthereumNews.com. Terraform Labs has filed a lawsuit claiming Citadel Securities was behind its infamous collapse. Terraform Labs, the company behind the collapsed Terra ecosystem, has filed a lawsuit against market-making firm Citadel Securities. Terraform’s Allegations The company alleges that the market-maker was behind a ploy that pushed the price of Terra’s UST stablecoin below its $1 peg. The de-peg kickstarted a set of cascading events that saw Terra’s $40 billion valued ecosystem wiped out in a crazy few weeks for the cryptocurrency market. According to the lawsuit filed with the U.S. District Court for the Southern District of Florida, Terraform Labs argues that the collapse of its UST stablecoin was not the result of a failure of the algorithm for minting and distributing the token. – Advertisement – Instead, Terra claimed that the UST market was destabilized by the “concerted, intentional effort of certain third-party market participants to ‘short’ and cause UST to depeg from its one-dollar price.” Terraform Labs called out Citadel Securities as the leading market maker behind the malicious move. To short an asset, an investor acquires and sells the asset at its current market with the hope that the price drops and they can buy it cheaper to repay the loan. A concerted effort by market participants with substantial holdings to short an asset often creates immense selling pressure, something Terra claims Citadel Securities did to the UST price. Although the US-based market maker has previously denied the allegations, Terraform’s latest lawsuit presents evidence supporting Citadel’s involvement. Among other things, Terraform cites a Discord chat in which a pseudonymous individual known as GiganticRebirth purportedly disclosed to Citadel CEO Ken Griffin plans to short UST. Specifically, the Citadel CEO allegedly told the user that “they [Citadel] were going to Soros the f*** out of luna ust.” The reference…
The post Terra Says This Market Maker Was Behind Its $40 Billion Collapse appeared on BitcoinEthereumNews.com.
Terraform Labs has filed a lawsuit claiming Citadel Securities was behind its infamous collapse. Terraform Labs, the company behind the collapsed Terra ecosystem, has filed a lawsuit against market-making firm Citadel Securities. Terraform’s Allegations The company alleges that the market-maker was behind a ploy that pushed the price of Terra’s UST stablecoin below its $1 peg. The de-peg kickstarted a set of cascading events that saw Terra’s $40 billion valued ecosystem wiped out in a crazy few weeks for the cryptocurrency market. According to the lawsuit filed with the U.S. District Court for the Southern District of Florida, Terraform Labs argues that the collapse of its UST stablecoin was not the result of a failure of the algorithm for minting and distributing the token. – Advertisement – Instead, Terra claimed that the UST market was destabilized by the “concerted, intentional effort of certain third-party market participants to ‘short’ and cause UST to depeg from its one-dollar price.” Terraform Labs called out Citadel Securities as the leading market maker behind the malicious move. To short an asset, an investor acquires and sells the asset at its current market with the hope that the price drops and they can buy it cheaper to repay the loan. A concerted effort by market participants with substantial holdings to short an asset often creates immense selling pressure, something Terra claims Citadel Securities did to the UST price. Although the US-based market maker has previously denied the allegations, Terraform’s latest lawsuit presents evidence supporting Citadel’s involvement. Among other things, Terraform cites a Discord chat in which a pseudonymous individual known as GiganticRebirth purportedly disclosed to Citadel CEO Ken Griffin plans to short UST. Specifically, the Citadel CEO allegedly told the user that “they [Citadel] were going to Soros the f*** out of luna ust.” The reference…
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