The team behind stablecoin issuer TrueUSD is bragging about its trading volume not long after TUSD lost its peg to the dollar, fueling the fears of coin holders who are worried about the recent collapse of key TUSD custodian Prime Trust.
During early trading hours on Wednesday, TUSD’s value fell to 80 cents to one USD on Binance US before settling around 90 cents to the dollar at the time of writing. Its total market capitalization stayed steady through the early hours before dropping sharply, shedding close to $100 million along the way, according to data from CoinGecko.
Of this $100 million, the bulk of it came from a single wallet on the decentralized blockchain Tron. This wallet dumped nearly $74 million in TUSD, according to the blockchain analysis site Whale Alert.
A stablecoin is a cryptocurrency whose price is pegged to a stable asset, which in this case is the US dollar. Its appeal for holders is a sense of confidence that they can redeem their stablecoins reliably with a lower chance of losing their value compared to other cryptocurrencies.
After news hit that TUSD was depegged, TrueUSD responded on Twitter by touting its trading volumes. Without addressing the depegging, the issuer highlighted data that showed 30-day trading volume of TUSD. It finished its tweet with a fresh hashtag it called #TUSDKeepGrowing.
Amid TUSD’s fluctuations, there were moves that seemed to bet against the token amid the uncertainty. In a Twitter post, crypto exchange Kraken announced an offer for customers to gain exposure to TUSD without owning it by transferring any collateral currencies to a futures wallet on their platform.
Dessislava Aubert, a senior analyst at market research firm Kaiko, said that the evidence shows some signs of selling for TUSD, but that the situation appears to be relatively stable. This, she told Decrypt, is largely because of Bitcoin-TUSD trades and recent support received from Binance, which introduced zero fees to trading in Bitcoin pairs and TUSD specifically on June 22.
However, Aubert said, TUSD’s recent pains have been driven instead by a “confidence crisis” brought on by growing concerns around one of its banking partners, the crypto custodian Prime Trust.
"It is a confidence based industry, so of course it will be problematic," she said of the relationship.
Starting on June 10, TUSD announced that it would temporarily pause minting through Prime Trust, sparking a selloff that cost TUSD its peg. Concerns around its relationship with Prime Trust deepened on June 22 when Nevada regulators issued a “cease and desist” order to the custodian, which was followed a week later by a request from the state to shut it down. According to Nevada authorities, Prime Trust owes hundreds of millions to clients that the company would be unlikely to repay.
TrueUSD initially downplayed the storm clouds gathering around Prime Trust. In a tweet last Friday, the issuer assured users it had no exposure to Prime Trust and holders of TUSD were secure. However, on the same day Prime Trust received the cease and desist order from regulators, TrueUSD notified its customers that minting and redemption of TUSD and other True Coins would be suspended.
Complicating this all of this was a backlash on Crypto Twitter following a report compiled by The Network Team on TrueUSD’s behalf. What the report found was that TrueUSD only had a slight exposure of just over $26,000 to Prime Trust, a claim met with incredulity by users.
Much of the distrust was directed at the auditor. Formerly known as Armanino, the firm worked for the now-defunct exchange FTX, where it failed to detect flaws in FTX's accounting and financial reporting practices. Members of the audit team left the company after FTX imploded last November, and rebranded themselves as The Network Team in March, according to CoinDesk.