TrueUSD Loses Dollar Peg and Crashes
BITmarkets Team
Jan 16, 2024
The stablecoin TrueUSD (TUSD), associated with Justin Sun, has recently dropped below its $1 peg.
This decline comes amidst reports that substantial amounts of TUSD are being exchanged for the competing stablecoin, Tether.
Around January 15, at 11:00 am UTC, TUSD's value dipped to as low as $0.984 and is currently at $0.988, which is 1.3% less than its target $1 peg, according to CoinMarketCap.
This devaluation coincides with a significant increase in TUSD sales on the cryptocurrency exchange Binance.
As of the latest data, traders have sold over $339.2 million of TUSD in the past 24 hours on Binance, surpassing the $296.8 million in purchases. This results in a net outflow of $42.3 million.
On January 10, there were reports indicating that TrueUSD was struggling to provide real-time attestations for its reserves, raising concerns about potential undercollateralization.
A report from Protos on January 10 mentioned issues with TrueUSD's API, which failed to assign a U.S. dollar value to its collateral assets.
The problems with TUSD were initially highlighted by a user under the pseudonym Rho Rider in a post on December 16. Rho Rider noted a potential arbitrage opportunity with TUSD, which had been trading at about 8% under its peg at $0.92 on Poloniex, while maintaining a relatively stable $0.99 on Binance.
Rho Rider posed the question, “The big [question] is why isn’t anyone taking the nearly 10% arb?”
They concluded that the most likely reason was the inability of users to withdraw or deposit TUSD on Poloniex, making the arbitrage trade unfeasible.
Users on Crypto X have also theorized that the large-scale sell-off might be linked to TUSD not being included in Binance’s Manta (MANTA) launch pool initiative.
Sources:
https://cointelegraph.com/news/tusd-stablecoin-depeg-justin-sun-binance-launchpool-true-usd
https://protos.com/trueusd-attestations-paused-again-this-time-for-improper-balances/
https://twitter.com/NoCryptFish/status/1745081696930660483
https://twitter.com/RhoRider/status/1735900701979443688
https://twitter.com/adamscochran/status/1747038561151439031
