On Oct. 10, Terraform Labs filed a motion in the United States District Court in the Southern District of Florida to compel Citadel Securities to produce documents relating to its trading actions in May 2022, around the time its stablecoin, now known as TerraUSD Classic, depegged.
It contends the May 2022 depeg when the asset crashed from $1 to $0.02 was caused by certain third-party market participants intentionally shorting the stablecoin instead of instability in its algorithm.
Terraform contends that the market destabilization that occurred did not result from instability in the algorithm underlying the UST stablecoin, said the firm in its motion.
Citadel Securities has, however, previously denied trading the TerraUSD stablecoin in May 2022, according to reports.
In its motion, Terraform argues that the documents are crucial for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission in February, which alleges Terraform Labs and its founder, Do Kwon, had a hand in “orchestrating a multi-billion dollar crypto asset securities fraud.”
“This defense will be substantially impaired if Citadel Securities is successful in withholding this limited information,” it stated.
If the court refuses to compel Citadel to produce the trading documents, Terraform requested the matter be transferred to the U.S. District Court for the Southern District of New York for decision by Judge Jed Rakoff.
In July, Terraform Labs sought permission from a judge to subpoena data from bankrupt crypto exchange FTX, claiming the information could help its defence.
