Citadel Securities, BlackRock, Gemini Slam Social Media Accusations of Involvement With UST Collapse
A conspiracy theory that began on 4chan and was amplified by Cardano founder Charles Hoskinson has been met with swift denials by all parties.
May 12, 2022 at 5:23 a.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/DQZJX2YNKNEUPKCTUGDBFRORQM.png)
Terraform Labs CEO Do Kwon on CoinDesk TV in December. (CoinDesk screenshot)
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Did UST collapse because of a shadowy conspiracy involving the same cast of characters from the GameStop (GME) short squeeze? Or was it because of a structural problem with the nature of stablecoins?
Bad news for those who believe the former: Those named in this conspiracy theory have swiftly denied involvement.
- The conspiracy theory alleges that money manager BlackRock (BLK) and market maker Citadel Securities borrowed 100,000 bitcoin (BTC) from the Gemini cryptocurrency exchange and swapped 25% for UST. Then the two companies dumped the UST and BTC, crashing UST's sister LUNA token along with the price of bitcoin.
- Charles Hoskinson, the founder of Cardano and co-founder of Ethereum, amplified this evidence-free narrative on Twitter before deleting the tweet.
- In its denial, BlackRock, the world's biggest asset manager and which manages Circle's USDC cash reserves, said it doesn't trade UST.
- Likewise, Citadel publicly stated that it does not trade in stablecoins.
- Gemini said in a tweet that it has made no such loan as claimed in the conspiracy theory.
- Meanwhile, crypto hedge fund Arca has told its partners that it is doubling down on UST because it believes the algorithmic stablecoin will ultimately recover and maintain its 1:1 peg with the U.S. dollar.
- LUNA is currently trading at 41 cents while UST is at 68 cents.
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