Terraform Labs Seeks Citadel Securities' Trading Data amid SEC Lawsuit
Terraform Labs Pte. Ltd. (Movant), has filed a motion to compel market maker Citadel Securities, LLC to divulge crucial trading data. This data, pertinent to a third-party subpoena, is deemed critical for Terraform Labs' defense against a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC). The lawsuit, presided over by the U.S. District Court for the Southern District of New York, delves into allegations of market destabilization due to purported intentional actions by certain market players to «short» and consequently cause the TerraUSD (UST) stablecoin to depeg from its $1 benchmark.
Disputing the SEC's allegations, Terraform Labs argues that the market instability did not stem from the algorithm underpinning UST but was a result of orchestrated efforts by third-party market participants to manipulate the stablecoin's value. The significant focus is on the trading activities around the May 2022 Depeg event, during which UST lost its peg to the dollar, crashing from $1 to $0.02. In light of this, Terraform Labs significantly narrowed down its subpoena requests, centering on the most critical trading data pertinent to this event.
Citadel Securities' response was to provide a single document under the ongoing Confidentiality Order while refusing any further cooperation. The document in question pertains to trading strategies involving Terra-Native Tokens or Terra Financial Instruments between March 1, 2022, and May 31, 2022. Terraform Labs believes that unearthing this data is pivotal to understanding the May 2022 Depeg’s dynamics, examining Citadel Securities' involvement, and whether there was a coordinated endeavor to short UST.
The motion filed accentuates the necessity for Citadel Securities to
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