TrueUSD (TUSD) Stablecoin Depreciates to $0.995: Is Bitcoin and the XRP Market in Danger?

• TrueUSD, a major stablecoin, experienced a de-pegging event, dropping below its usual 1:1 value with the US dollar.

• The de-pegging occurred alongside Binance CEO Changpeng Zhao’s departure and amid large sell orders in the market.

TrueUSD (TUSD), a leading stablecoin with a market capitalization exceeding $3.1 billion, has experienced a notable de-pegging incident. This event coincides with heightened scrutiny and uncertainty in the digital currency sphere, particularly following the exit of Changpeng “CZ” Zhao, CEO of Binance, the world’s largest cryptocurrency exchange.

TUSD’s De-Pegging Event and Market Response

TrueUSD’s value recently dropped to as low as $0.995, a deviation from its usual peg to the US dollar. The de-pegging event has raised concerns about the stablecoin’s stability. Notably, this downturn in TrueUSD’s value occurred concurrently with the departure of CZ from Binance, sparking widespread speculation and increased liquidation of TUSD holdings.

Market analysts have observed a surge in large sell orders for TrueUSD, contributing significantly to its price fluctuation. Riyad Carey, a researcher at Kaiko, indicated that the large market order sell-offs, including a single transaction worth $3 million, played a crucial role in destabilizing TrueUSD’s peg to the dollar.

TUSD peg looking shaky as some big market sells are rolling through, largest of which was $3mn in a single order pic.twitter.com/TnU9nIWw1w

— Riyad Carey (@riyad_carey) November 27, 2023

Binance’s Influence on TrueUSD’s Ecosystem

The connection between Binance and TrueUSD is a focal point in understanding the recent market events. Binance, a major supporter of TrueUSD, announced in March 2023 that it was replacing the Binance USD (BUSD) holdings in its Secure Asset Fund for Users (SAFU) with Tether (USDT) and TrueUSD. This decision came after Paxos stopped minting new BUSD in line with the directions from the New York Department of Financial Services.

Following the regulatory scrutiny of Paxos and BUSD, Binance minted nearly $50 million worth of TUSD. With almost 90% of TUSD’s circulating supply currently held on Binance, the exchange’s actions and the overall market sentiment significantly influence the stability and perception of TrueUSD.

Regulatory and Security Challenges

Adding to the complexity of the situation is the regulatory landscape. CZ’s exit from Binance followed a settlement with the US Department of Justice, with ongoing investigations by the SEC into potential access to user funds in Binance US. These regulatory challenges impact Binance and cast a shadow over associated assets like TrueUSD.

Security concerns around TrueUSD also surfaced, particularly after the emergence of TEURO, a token linked to the same address as TUSD, raising questions about the integrity of TrueUSD’s infrastructure. This incident, coupled with the recent de-pegging, has spotlighted the stablecoin’s security measures and the robustness of its underlying technology.

https://twitter.com/tusdio/status/1713774228934476217

TrueUSD is at a critical juncture, with its stability being tested by market forces and regulatory scrutiny. As the cryptocurrency market evolves, investors and regulators will closely watch the performance and resilience of stablecoins like TrueUSD. These events will undoubtedly have broader implications for the digital currency landscape.