Scandal-Tied Auditors’ Involvement with TUSD Raises Concerns Amid Depeg
TL;DR TrueUSD (TUSD) has experienced a second depegging incident. This has prompted whales and investors to capitalize on arbitrage opportunities, while FTX.US auditors have raised eyebrows by attesting to TUSD’s reserves. Despite the recent claims and concerns, TUSD maintains that it has no direct exposure to Prime Trust. The events serve as a reminder of the risks associated with stablecoin stability and the importance of robust custodial arrangements within the crypto ecosystem.
TrueUSD has experienced a second depegging incident.
Whales and investors have capitalized on arbitrage opportunities.
TrueUSD (TUSD) grapples with yet another depegging incident, despite vehemently denying any connection to crypto custodian Prime Trust. This recent detachment marks the second time that TUSD has strayed from its intended peg this month.
The situation unfolded when Prime Trust was placed under receivership following BitGo’s abrupt withdrawal from its bid to acquire the custodian.
TUSD’s stability took a hit as its value plunged to 0.9974 against Tether (USDT) on Binance, dropping even further to 0.80 on Binance.US due to its exposure to Prime Trust. As a result, the withdrawal of TUSD from the Binance launchpool of Maverick Protocol (MAV) has commenced.
TUSD Deposit Rates Soar to 42% Amid Curve Pool Disruption
An alarming imbalance in reserves within the Curve pool has also emerged, with a staggering surge of over 70%. This disruption has further driven up the deposit and loan interest rates of TUSD on Aave V2, with deposit rates reaching an unprecedented 42% and loan rates skyrocketing to 54%.
These developments have prompted whales and investors to seize arbitrage opportunities by swapping their TUSD holdings for USDC and other stablecoins. Despite TUSD implementing a plunge protection mechanism with $20 million allocated to buy orders, maintaining a floor price of $0.997, an additional $21 million infusion would be necessary to drive it down to $0.70 on Binance.
Concerns about TUSD’s depegging risks have been echoed by notable figures in the crypto space, including Adam Cochran, The Wolf Of All Streets, and Parrot Capital, who took to Twitter to caution against potential pitfalls. Furthermore, The Network Firm (formerly Armanino), the auditing firm responsible for FTX.US audits, has provided attestation of TUSD’s reserves.
This revelation has raised eyebrows, as Adam Cochran astutely pointed out, considering the auditors’ involvement with TUSD audits after their association with the infamous FTX scandal, leading to a rebranding.
On the Flipside
Despite recent claims and concerns, TrueUSD maintains that it has no direct exposure to crypto custodian Prime Trust.
The withdrawal of TUSD from the MAV launchpool on Binance may be a precautionary measure rather than a direct consequence of the Prime Trust situation.
The attestation of TUSD’s reserves by The Network Firm, the auditing firm associated with the FTX scandal, does not automatically imply wrongdoing in the TUSD audits.
TUSD’s repeated depegging incidents and its exposure to Prime Trust highlight stablecoins‘ challenges in maintaining their intended value. These events serve as a reminder of the risks associated with stablecoin stability and the importance of robust custodial arrangements within the crypto ecosystem.
To learn more about the growing demand for US dollar-backed stablecoins in Asia, read here:
Circle (USDC) Eyes Asia’s Growing Demand for US Dollar-Backed Stablecoins
To stay updated on the latest trends in stablecoin flow and its implications for crypto exchanges, read here:
Rising Stablecoin Flow Signals Growth on Crypto Exchanges