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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.