Citadel Securities, BlackRock, Gemini Slam Social Media Accusations of Involvement With UST Collapse

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Did UST collapse because of a shadowy conspiracy involving the same cast of characters from the GameStop (GME) short squeeze? Or was it because of a structural problem with the nature of stablecoins?

Bad news for those who believe the former: Those named in this conspiracy theory have swiftly denied involvement.

• The conspiracy theory alleges that money manager BlackRock (BLK) and market maker Citadel Securities borrowed 100,000 bitcoin (BTC) from the Gemini cryptocurrency exchange and swapped 25% for UST. Then the two companies dumped the UST and BTC, crashing UST's sister LUNA token along with the price of bitcoin.

• Charles Hoskinson, the founder of Cardano and co-founder of Ethereum, amplified this evidence-free narrative on Twitter before deleting the tweet.

• In its denial, BlackRock, the world's biggest asset manager and which manages Circle's USDC cash reserves, said it doesn't trade UST.

• Likewise, Citadel publicly stated that it does not trade in stablecoins.

• Gemini said in a tweet that it has made no such loan as claimed in the conspiracy theory.

• Meanwhile, crypto hedge fund Arca has told its partners that it is doubling down on UST because it believes the algorithmic stablecoin will ultimately recover and maintain its 1:1 peg with the U.S. dollar.

• LUNA is currently trading at 41 cents while UST is at 68 cents.