TUSD under attack following Prime Trust insolvency
Prime Trust’s insolvency has led traders to short TUSD despite claims it had “no exposure”
HFA_Illustrations/Shutterstock modified by Blockworks
Traders are rushing to short stablecoin TrueUSD.
The mounting short interest comes after cryptocurrency custodian Prime Trust could no longer fulfill withdrawal requests — and after BitGo yanked its bid to purchase Prime Trust.
US-based Prime Trust — known for fiat to digital asset on- and off-ramps — had before that been struggling for cash and had recently been ordered by a Nevada financial regulator to half operations under a cease-and-desist order.
TUSD representatives have said the stablecoin is unaffected by the situation, claiming it had “no exposure” to Prime Trust and maintained “multiple USD rails for minting and redemption.”
Protos reported earlier this week that TUSD had paused routine attestations of the stablecoin, and no shortage of traders have continued to place short bets against it since.
On Aave, traders are paying up to 50% APY to short the asset, with one user placing a $4 million short on the stablecoin.
The TUSD Curve Pool shows similar signs — with its currency reserves reaching 61%.
A Twitter user who goes by etheraltog, noted that users attempting to redeem TUSD are getting it re-minted to their wallets.
TUSD slightly depegged from the dollar but regained its $1 peg through midday Friday.
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