TrueUSD (TUSD), a stablecoin linked to the US dollar, took a hit on January 15th, plummeting below its $1 peg for the first time in history. Reports of mass withdrawals, technical issues, and potential undercollateralization swirled around the event, leaving investors wary and the future of the stablecoin uncertain.
The downward spiral began around 11 AM UTC, with TUSD dropping as low as $0.984 by 11:15 PM. At the time of writing, it clings to a fragile $0.988, still 1.3% shy of its intended price. This depeg coincided with a surge in selling pressure on Binance, the leading crypto exchange. Over $339 million worth of the stablecoin exchanged hands in the past 24 hours, with buy orders lagging behind by $42.3 million, signaling a substantial outflow.
TUSD Reserves on Fire: Real-Time Woes Spark Panic
Adding fuel to the fire were reports of TUSD struggling to maintain real-time attestations of its reserves. A January 10th Protos report highlighted API malfunctions preventing the system from accurately displaying the dollar value of the stablecoin’s backing assets. This raised concerns about potential undercollateralization, leaving investors questioning the stability of the stablecoin.
The seeds of doubt were sown even earlier, in December, when pseudonymous X user Rho Rider discovered a potential arbitrage opportunity on Poloniex. TUSD traded at a significant discount – a staggering 8% below its peg at $0.92 – while maintaining a steadier $0.99 on Binance. However, Rho noted the anomaly could be explained by a lack of withdrawal and deposit functionality for the stablecoin on Poloniex, effectively trapping the asset and hindering arbitrage. User reports in the Poloniex Telegram group confirmed ongoing withdrawal issues, further fueling anxiety among TUSD holders.
Furthermore, speculation on Crypto X linked the sell-off to TUSD’s exclusion from Binance’s Manta (MANTA) launch pool initiative. This fueled whispers of preferential treatment for other stablecoins and potentially eroded confidence in TUSD’s legitimacy.
TrueUSD and Poloniex remain tight-lipped, leaving a cloud of uncertainty hanging over the situation. Whether the stablecoin can regain its peg and restore investor trust hinges on addressing the technical issues, ensuring transparency about its reserves, and regaining the confidence of its user base. Only time will tell if TUSD can weather this storm and reclaim its place as a reliable dollar-backed stablecoin.