TrueUSD Depegging Linked to Binance Launchpool Activities

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On January 18, 2024 TrueUSD (TUSD) blames Binance Launchpool mining activities for remove freckles On x. says

Regular attestations continue as part of our standard operations and any claims to the contrary are incorrect. We have observed recent community mining activities related to the Binance Launchpool that have resulted in short-term arbitrage opportunities.

The recent delinking of TrueUSD (TUSD) has attracted considerable attention in the cryptocurrency community. This event was closely related to the activities of the Binance Launchpool and caused the value of TUSD to fall below its fixed $1, reaching $0.97.

January 15, 2024 saw a significant selloff of TUSD on the Binance cryptocurrency exchange, resulting in a significant drop from the US dollar. Over a 24-hour period, traders sold more than $339.2 million worth of TUSD, compared to $296.8 million in buy orders, resulting in a net outflow of $42.3 million from the exchange.

The situation worsened when TrueUSD experienced problems with real-time attestations of its reserves around January 10, raising concerns that the stablecoin may be undersecured. These technical difficulties identified in API, prevents it from providing accurate US dollar values ​​of its collateralized assets. Additionally, on Poloniex, a cryptocurrency exchange, TUSD has been trading around 8% below its peg for several weeks, while maintaining a relatively stable price around $0.99 on Binance​​.

Turning to debugging, the TrueUSD team linked the incident to activities related to the Binance Launchpool. They observed recent community mining activities that resulted in short-term arbitrage opportunities. Despite concerns, TrueUSD reassured users of the normalcy of such market dynamics and liquidity adjustments. They highlighted the smooth functioning of their redemption channels and the ongoing functionality of TUSD mining and redemption services​​​​

This depegging incident raises broader questions about the stability and transparency of stablecoins in the crypto market. In June 2023, TrueUSD temporarily suspended its automated attestations due to balance discrepancies. The stablecoin issuer later announced an upgrade to their fiat reserve audit and attestation system in partnership with accounting firm MooreHK. TrueUSD said their total assets held in reserve accounts totaled $1.93 billion.

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The recent decline in the value of TUSD coincided with the introduction of a competing stablecoin, FDUSD, to Binance’s staking program. Market analysts speculate that a significant number of investors sold TUSD for FDUSD to participate in Binance’s reward programs, potentially contributing to the untying of TUSD.

The depegging of TrueUSD highlights the fragility of stablecoins in volatile market conditions and the need for robust mechanisms to maintain pegs to underlying assets. It also highlights the importance of transparency and trust in the management of stablecoin reserves, which are critical to maintaining investor confidence and the overall stability of the crypto market.

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