Terraform Labs, the development firm behind Terra network and the failed stablecoin TerraUSD (USTC), is seeking permission from a court to get access to data from the bankrupt crypto exchange FTX.
According to Terraform Labs, the failure of its UST stablecoin was the result of an attack by large short sellers, which the firm claimed included FTX boss Sam Bankman-Fried’s trading firm Alameda Research.
The request for the data was made in a motion filed on July 19 in FTX’s bankruptcy case.
The requested data includes records related to on-chain wallets, accounts, and assets traded on both FTX international and FTX’s US-based exchange.
“To establish these defenses, TFL needs Debtors’ records about wallets, accounts, and assets used to transact on the FTX International and US exchanges and sales/offers of large volumes of cryptocurrencies developed by TFL, if any, by FTX Trading and West Realm Shires Services Inc. d/b/a FTX US,” the filing said.
Necessary for defense against fraud charges
According to Terraform Labs, this data is necessary for it to develop its defense against fraud charges in its own legal case against the US Securities and Exchange Commission (SEC).
Terraform Labs and its founder Do Kwon were sued by the SEC on February 16, with the regulator alleging that UST was an unregistered security.
The SEC said at the time that Kwon and Terraform Labs were responsible for “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
The collapse of UST and the broader Terra ecosystem represented a major blow for the crypto market in general, and especially for so-called algorithmic stablecoins.
The UST stablecoin was meant to have a constant $1 value via a mix of algorithms and trader incentives involving a sister token, LUNA.
UST lost its US dollar peg in May of 2022 and never recovered despite several rescue attempts from Do Kwon.
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