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TrueUSD (TUSD) Struggles to Hold $1 Peg as Exchange Activity Heats Up (crypto-news-flash)

  • The rise of Binance-backed FDUSD has significantly reduced the demand for the TUSD with experts relating its problems to the HTX and Poloniex hacks.
  • The firm behind TUSD, Techteryx is convinced the stablecoin will re-peg despite the claims of undercollateralized digital assets based on data from third parties.

TrueUSD (TUSD), one of the top-rated stablecoins that is believed to be connected to Justin Sun, temporarily lost its peg to the United States dollar in the past 24 hours leading to Tuesday, thus raising fear among the holders. The TUSD stablecoin has made headlines in the last few days, with claims of possible discrepancies in its fiat collateral.

Although the rumors could be ungrounded, crypto investors holding on to TUSD fear a possible replay of the Terra Luna UST implosion in early 2022 that triggered the subsequent bear market and heightened regulatory scrutiny in different jurisdictions.

As a result, more investors have been offloading the TUSD for other stablecoins like the Binance-backed FDUSD that offers trading benefits on the exchange. According to market data from Binance, more than $444 million in TUSD sell orders were recorded in the past 24 hours compared to $301 million in buy orders.

The Surprising Twist on TUSD De-peg

The TrueUSD stablecoins are available on top smart contract blockchains led by Ethereum, Tron network, Avalanche, and BNB Smart Chain. Notably, the Justin Sun-backed TRON network leads in TUSD circulation with about $1.48 billion as of this report.

Reputedly, the United States financial authorities are investigating Sun in connection to anti-money laundering issues similar to the ones facing Binance founder and former CEO Changpeng Zhao (CZ). Earlier this week, the real-time attestations that guarantee stable supply and fiat backing of TUSD were temporarily paused, further arousing suspicions.

However, Techteryx company, which is behind the TUSD stablecoins, dispelled the claims as a network error that was quickly fixed. Nevertheless, the TUSD price dropped as low as 98 cents on Tuesday and had not fully repegged as of this report.

“TUSD is related to Justin Sun, and its market cap is constantly shrinking. It is likely due to the potential impact of the HTX and Poloniex hacks,” Bradley Park, an analyst at CryptoQuant, noted. 

Additionally, Park is convinced the troubles facing TUSD are largely contributed to the notable rise of First Digital USD (FDUSD), which is supported by Binance following the downfall of BUSD. Notably, Binance slashed trading fees associated with FDUSD pairs including Ethereum (ETH), BNB, Dogecoin (DOGE), and Solana (SOL).

As a result, the TUSD’s daily trading volume dropped from more than $1 billion to around $435 million in less than two weeks compared to FDUSD which has a market cap of around $2 billion and a daily traded volume of approximately $4 billion. 

Market Outlook

The mass adoption of volatile crypto assets has largely inspired the rise of stablecoins in the past few years. As of this report, the total stablecoins market cap stands around $134 billion, and daily trading volume of about $50 billion. Consequently, the stablecoins industry will continue to grow exponentially in the coming years as more governments around the world implement clear regulatory frameworks for digital assets.

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