TrueUSD (TUSD) has clarified that the recent depegging of its value from the US dollar is associated with activities on Binance Launchpool.
In a recent post on X (formerly Twitter), the TUSD team said they “have observed recent community mining activities associated with Binance Launchpool, which have led to short-term arbitrage opportunities.”
The team added that these activities are considered normal within market dynamics and liquidity adjustments.
Furthermore, TUSD reassured users that their redemption channels, involving global banks, are functioning smoothly as always, ensuring seamless transactions.
“We are dedicated to further broadening our collaboration with Binance. Additionally, TUSD minting and redemption services are always accessible at http://tusd.io.”
We are dedicated to further broadening our collaboration with Binance. Additionally, TUSD minting and redemption services are always accessible at https://t.co/OsPDK9pKbq.
— TrueUSD (@tusdio) January 18, 2024
TUSD is the first USD-pegged stablecoin to deploy daily attestations for its underlying reserves.
TUSD Depegging Started on January 15
The recent depegging incident occurred on January 15 when TrueUSD temporarily fell below its U.S. dollar peg.
Data from Binance revealed that users sold approximately $238.3 million worth of TrueUSD via the TUSD-USDT trading pair within 24 hours, with a net outflow of around $154.5 million.
However, traders also purchased around $83.8 million worth of TrueUSD during the same period.
Earlier reports on January 10 suggested that TrueUSD had paused its real-time attestations of reserves, leading to speculation regarding the company’s ability to collateralize the tokens.
The company later clarified that the incident was due to internal errors and announced a full upgrade of its fiat reserve audit system in partnership with MooreHK, a Hong Kong-based accounting firm.
The upgraded attestation report now provides additional details about the reserve funds held by financial and fiduciary partners.
Popularity of Binance’s Launchpool Program Led to TUSD Sell-Off
Experts have pointed out that the recent surge in the popularity of Binance’s launch pool program, particularly the introduction of MANTA and the staking requirements of BNB or FDUSD, may have influenced investors to sell off TrueUSD in favor of these options.
Justin d’Anethan, head of APAC business development at Keyrock, a crypto market maker, explained that investors may have shifted their focus from stablecoins like TUSD to participate in the launch pool program.
Additionally, TrueUSD may have been impacted by the recent $100 million security breach on Poloniex, a cryptocurrency exchange associated with TRON founder Justin Sun.
It is worth noting that this is not the first time TUSD has lost its dollar peg.
In October last year, the stablecoin lost its peg following the announcement that it had suspended minting activities through its technology partner Prime Trust.
With a market cap of over $1.8 billion, TUSD is the fifth largest stablecoin in the market behind USDT, USDC, BUSD, and DAI.
TUSD, as well as all other major stablecoins, lost a large share of their market cap last year following the collapse of algorithmic stablecoin TerraUST.
While the bulk majority of stablecoins have failed to fully recover from the 2022 meltdown yet, Tether has managed to regain the market value it lost last year.
As reported, Tether’s market cap has approached $100 billion, with its market share growing from 50% at the beginning of 2023 to over 70% as of the end of the year.
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