Industry Updates

BlackRock and Citadel deny hand in Terra stablecoin collapse

Crypto exchange Gemini also deny loaning 100,000 bitcoin to the pair

Theo Andrew


BlackRock and hedge fund giant Citadel Securities have denied trading crypto token terraUSD (UST) following the stablecoins implosion yesterday.

It comes after rumours the world’s largest asset manager and Citadel Securities had conspired to borrow 100,000 bitcoins – worth roughly $2.7bn – from crypto exchange Gemini to purchase UST.

It was then alleged the pair were planning on dumping the assets, creating a run on the market and wiping almost $28bn off the market cap of sister token Luna.

Gemini later responded to the allegations with a tweet, stating: “We are aware of a recent story that suggested Gemini made a 100,000 bitcoin loan to large institutional counterparties that reportedly resulted in a selloff in luna. Gemini made no such loan.”

This was followed by a statement from Citadel spokesperson who said: “We had nothing to do with this situation and we do not trade stablecoins including UST.”

A BlackRock spokesperson added: “Rumours that BlackRock had a role in the collapse of UST are categorically false. In fact, BlackRock does not trade UST.”

The allegations first came from a tweet that cited Citadel as the initial culprit, which has now been tweeted over 5,000 times. ETF Stream has not been able to corroborate the claim.

Despite this, both BlackRock and Citadel have recently entered the crypto market.

Citadel accepted a $1.15bn investment from venture capitalist Sequoia Capital and crypto venture firm Paradigm, utilising the firm’s technology to bring credibility to the crypto market.

Meanwhile, BlackRock entered an agreement with crypto technology firm Circle to become the primary asset manager of its stablecoin USDC.

Meanwhile, UST – which is supposed to maintain a 1-to-1 peg with the US dollar – was trading at $0.61, as of 08:00 on Thursday, having fallen to a low as $0.26 on Wednesday.

ETF issuers have launched several crypto ETPs tracking terra in recent months.

21Shares launched the world’s first terra ETP, the 21Shares Terra ETP (LUNA), in January, with roughly $5m assets under management.

This was followed by the Valour Terra (LUNA) ETP which launched in February and the VanEck Terra ETN (VLNA) which launched last month.

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