“A coordinated short-selling attack” involving FTX led to the depeg of Terraform Labs (TFL)‘s algorithmic stablecoin UST. This is described in the organisation’s lawyers’ motion, The Block reports.
Representatives have sought information from FTX as part of the defence of TFL and its founder Do Kwon in a suit brought by the SEC.
The lawyers want to compel the crypto exchange to hand over certain information about accounts, wallets and assets.
“The data are crucial for protection. […] TFL experts will be able to analyse the trades of those who opened short positions,” the statement says.
The court will consider the company’s motion on August 2.
In February 2023 the SECfiled charges against TFL and Do Kwon in a multi-billion-dollar securities fraud scheme. In particular, the Commission charged them in relation to TerraUSD (UST) and the LUNA token.
In September 2022, in South Korea an arrest warrant for Do Kwon was issued along with five other employees on charges including violations of capital markets law.
On 23 March, Montenegrin police arrested an entrepreneur as he attempted to fly out of Podgorica airport to Dubai using forged documents. In May he and former Terraform Labs CFO Han Chang-joon did not plead guilty.
South Korea urged Montenegro to extradite Kwon to his homeland. The United States also seeks his extradition, where he faces charges of fraud brought by the SEC and the U.S. Attorney’s Office for the Southern District of New York.
On 19 June the Podgorica court found the founder of TFL guilty of document forgery during an attempt to leave Montenegro. He was sentenced to four months in prison.
Earlier, the Swiss government blocked about $26 million in bitcoin and other cryptocurrencies linked to Terraform Labs and Kwon.
As previously reported, former TFL chief operating officer Chris Amani will assume the role of acting CEO.