Terraform Labs has accused U.S.-based American market-making firm Citadel Securities LLC of intentionally destabilizing its TerraUSD (UST) stablecoin in May 2022, alleging that the firm was the result of a “concerted, intentional effort” rather than an algorithmic failure.

The UST stablecoin was designed to maintain its 1:1 peg to the U.S. dollar by ensuring that the supply and demand for it are always balanced via an arbitrage strategy. If it traded higher than $1, the protocol incentivized users to mint UST and burn its sister token LUNA (also the network’s staking and governance asset), aimed at lowering the Terra price of UST by increasing supply and increasing the LUNA price (by reducing its supply).

In a motion filed with the U.S. District Court for the Southern District of Florida earlier this week, Terraform requested Citadel Securities to produce certain documents related to its trading activities between March 1, 2022, and May 31, 2022.

According to Terraform, obtaining this information is “vital” to its defense in a legal action brought by the U.S. Securities and Exchange (SEC) in February this year, accusing the company and its co-founder Do Kwon of misleading investors about the stability of TerraUSD, which at one point plummeted from Go to Source to See Full Article
Author: Andrew Asmakov

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