The asset-management titan BlackRock and hedge fund Citadel Securities deny involvement in the collapse of the algorithmic stablecoin UST and the cryptocurrency LUNA.
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Previously, rumors circulated online that the firms borrowed 100 000 BTC from the Gemini exchange and swapped 25 000 BTC for UST. They allegedly contacted Terraform Labs head Do Kwon and told him they planned to unload a large amount of Bitcoin, offering him to buy a large stash of cryptocurrency at a discount for UST.
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Then BlackRock and Citadel allegedly dumped all of their assets, which led to the collapse of UST, LUNA and the entire market.
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\”BlackRock and Citadel knew that Anchor, which holds a large amount of LUNA, was a Ponzi scheme, and this collapse would trigger a larger outflow than Anchor could absorb. This would spark a mass sell-off of Luna, causing it to detach from $1 and further wreck the market. Now BlackRock and Citadel could buy Bitcoins cheaply to settle the loan and pocket the difference,\” the theory contends.
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The theory was spread, among others, by IOHK chief Charles Hoskinson. He later deleted the tweet and said the rumours were unconfirmed.
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Gemini exchange said it did not provide a loan of 100 000 BTC to institutional counterparties.
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BlackRock described the rumors of its involvement in the UST crash as \”categorically false\” and noted that the company does not trade the asset.
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Citadel likewise said that the firm does not trade stablecoins, including UST, the link.
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On the back of Terraform Labs\’ measures to rescue the stablecoin from collapse, UST supply rose above 18 billion coins. The price of the cryptocurrency fell below $0.01. UST trades around $0.50.
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As of writing, the price of UST was around $0.60.
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The price of LUNA collapsed to $0.30.
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Back in early May, UST lost its peg to the US dollar amid outflows from Anchor. On May 9, users withdrew more than 3.3 billion UST from the protocol.
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The price of the algorithmic stablecoin and LUNA has been falling rapidly for several days now.
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Do Kwon unveiled a plan to restore UST\’s price, but this did not stem the sell-off.
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