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
Updated May 12, 2022 at 3:07 p.m. UTC

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.
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