Conspiracy Theories Abound as Terra Tries to Save UST

cryptonews.com:

TerraUSD (UST), an algorithmic stablecoin hosted by the Terra network and created by South Korea's Terraform Labs, has once again lost its dollar peg after a wave of sell-offs hit the crypto market.

The stablecoin, which is supposed to maintain a value of USD 1 by creating and destroying supply through a swap with Terra’s governance and staking token LUNA, dropped to as low as USD 0.666831 at one point over the past 24 hours, according to CoinGecko.

UST's depeg prompted the Luna Foundation Guard (LFG), a nonprofit organization dedicated to maintaining the stability of the UST peg, to interfere and lend out USD 1.5bn in Bitcoin and UST to defend the peg.

The action has ostensibly helped UST recover towards its peg. At 7:49 UTC, the 10th coin by market capitalization is trading at USD 0.894706, closer to its dollar peg.

While the situation is still ongoing, a number of conspiracy theories are floating around the crypto community, speculating what could have led to UST losing its peg.

As pointed out by Ran Neuner, co-founder and CEO of Onchain Capital, a blockchain investment fund and advisory service, one speculation is that the attack on UST was coordinated by major investment firm Citadel.

"This seems highly plausible given their anti- Bitcoin stance," Neuner argued. "Also, when [Terra CEO Do Kwon]/LFG publicized they would protect the peg at certain level it was an invitation to attack. Wall Street are experts at this."

Bitcoin trader Jacob Canfield even expanded on the theory that Citadel was the "culprit" of the UST depeg. He claimed that the investment firm borrowed a large amount of BTC, traded some for UST, and started dumping its BTC and UST after opening a short position.

Others drew parallels between UST's depeg and how