TrueUSD Falls Below $1 Peg as Holders Cash Out for Tether: What You Need to Know

TrueUSD, a stablecoin linked to Justin Sun, has dropped below its intended value due to high selling activity on Binance.

title: TrueUSD Falls Below $1 Peg as Holders Cash Out for Tether: What You Need to Know

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The TrueUSD stablecoin’s value declines as holders sell off $330M worth of TUSD.

🔥🔥 Big news in the stablecoin world! TrueUSD (TUSD), the stablecoin associated with Justin Sun, has fallen below its $1 peg as holders have been cashing out for competitor stablecoin Tether (USDT) 🔥🔥

The Dramatic Fall

TUSD’s value first dropped significantly below its peg on Jan. 15 around 11:00 am UTC, hitting a low of $0.984 at 11:15 pm. As of now, TUSD is trading at $0.988, 1.3% below its intended $1 peg, according to CoinMarketCap data.

Binance Selling Frenzy

This drop in value coincides with an overwhelming volume of TUSD being sold on the popular crypto exchange Binance. In the last 24 hours, traders have sold over $339.2 million worth of TUSD on Binance, while buy orders only amount to $296.8 million. This results in a net outflow of $42.3 million.

Troubles with Attestations and Collateralization

Earlier this month, reports surfaced about TrueUSD encountering difficulties with real-time attestations of its reserves, suggesting that the stablecoin may have been undercollateralized. Protos, in a report dated Jan. 10, highlighted how TrueUSD’s API experienced errors and was unable to provide a U.S. dollar value for its collateral assets.

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Is Arbitrage the Answer?

A user named Rho Rider caught the attention of the community by pointing out a potential arbitrage opportunity with TUSD. While TUSD was trading at nearly 8% below its peg at $0.92 on Poloniex, its price remained stable at around $0.99 on Binance. Rho questioned why no one was taking advantage of this nearly 10% arbitrage opportunity.

Withdrawal Issues

The inability to withdraw or deposit TUSD on Poloniex seemed to be the “obvious explanation” for the lack of arbitrage trading. Messages from the Poloniex Telegram group revealed that users were still unable to withdraw TUSD from the exchange.

Potential Reasons for the Sell-Off

Speculation is rife among users that the significant sell-off could be related to TUSD not being listed as one of the assets on Binance’s Manta (MANTA) launch pool initiative. However, no official confirmation has been provided to support this claim.

Q&A: What You May Want to Know

Q: Is TrueUSD safe to use as a stablecoin?

A: While the recent events may raise some concerns, it is important to remember that all stablecoins carry a certain level of risk. It is advisable to stay updated on news and developments regarding any stablecoin you plan to use.

Q: Should I switch from TUSD to USDT?

A: Switching between stablecoins depends on individual preferences and needs. It is recommended to assess the stability and credibility of both TUSD and USDT before making any decision.

Q: What is the impact of TUSD falling below its peg?

A: When a stablecoin falls below its peg, it erodes trust and may raise questions about its collateralization and overall stability. This can lead to a loss in confidence among users and potential market instability.

Q: How can exchanges prevent occurrences like this?

A: Exchanges play a crucial role in maintaining stablecoin stability. They should ensure proper due diligence when listing stablecoins and regularly assess their collateralization and reserve attestations.

Future Outlook and Conclusion

The recent events surrounding TrueUSD highlight the challenges that stablecoins face in maintaining their intended peg. As the concept of stablecoins continues to evolve, it is crucial for projects to address issues promptly to maintain user trust and market confidence.

In conclusion, while TrueUSD’s fall below the $1 peg may seem alarming, it is a reminder of the dynamic nature of the crypto market. Investors and users should stay informed and exercise caution when dealing with stablecoins or any other crypto-related assets.

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References:

1. USDC Stablecoin Experiences Momentary Depeg on Binance
2. FINRA’s 2024 Report Highlights Emergence of Crypto-Related Compliance Risks
3. Watchdog Group Doubles Down on Circle-Tron Money Laundering Claims
4. MakerDAO’s Plan to Bring Back ‘DeFi Summer’ – Rune Christensen

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