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Billionaire Ken Griffin’s trading firm, Citadel Securities, denied a claim from bankrupt Terraform Labs that it was behind the collapse of the algorithmic stablecoin terraUSD (UST) in May last year.

Earlier this year, the U.S. Securities and Exchange Commission (SEC) charged Terraform Labs and its co-founder and former CEO Do Kwon with fraud, selling unregistered securities, selling unregistered security-based swaps and other related claims. Federal prosecutors in New York also charged Do Kwon with fraud hours after he was arrested by police in Montenegro.

Citadel said in a court filing on Thursday that Terraform’s claim that Citadel was behind its collapse is being used to deflect attention from its charges. “To deflect attention from these allegations (and likely the crimes yet to be discovered), Terraform uses a motion to compel to pursue a ridiculous conspiracy theory “exposing” the purportedly hidden role of Citadel Securities in its self-imposed disaster,” the firm said.

“Not only is the time period of the request irrelevant, but the theory is baseless,” Citadel added.

The filing comes after Terraform filed a motion earlier this month alleging Citadel was behind the collapse, citing social media posts. However, Citadel said the social media sources of Terraform’s claims, including an account of pseudonymous user “Gigantic Rebirth,” who said Griffin divulged his plans to depeg UST over “nice bacon rib” lunch, is “absurd on its face.”

The Terra network and Do Kwon rose to the highest tier of the crypto world thanks to big-shot investors, only to fall apart within a few days in May 2022. On May 7, the price of the then-$18-billion algorithmic stablecoin UST, which is supposed to maintain a $1 peg, started to wobble and fell to 35 cents on May 9. Its companion token, LUNA, which was meant to stabilize UST’s price, fell from $80 to a few cents by May 12. The collapse sent a shockwave throughout the crypto sector, eventually leading to a prolonged crypto winter.

Citadel said it only engaged in two test transactions involving UST, with a collective value of “roughly thirteen cents,” noting that Terraform is aware that the hedge fund “could not and did not play the role it suggests in its motion to compel.”

“Because Terraform has no good-faith basis for its requests, the Court should reject its effort to abuse the discovery process and provide sanctions as it deems appropriate,” the hedge fund titan said. Terra may have to pay for “lost earnings and reasonable attorney’s fees” if the court imposes a sanction, Citadel added.

Edited by Kevin Reynolds.

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