Scandal-Tied Auditors’ Involvement with TUSD Raises Concerns Amid Depeg

TUSD’s depegging woes persist amidst Prime Trust controversy, raising concerns about stability and investor trust.

Man falling head first holding onto huge TUSD token.
Created by Kornelija Poderskytė from DailyCoin
  • TrueUSD has experienced a second depegging incident.
  • Whales and investors have capitalized on arbitrage opportunities.
  • The involvement of FTX.US auditors in attesting to TUSD’s reserves has raised eyebrows.

TrueUSD (TUSD) grapples with yet another depegging incident, despite vehemently denying any connection to crypto custodian Prime Trust. This recent detachment marks the second time that TUSD has strayed from its intended peg this month. 

The situation unfolded when Prime Trust was placed under receivership following BitGo’s abrupt withdrawal from its bid to acquire the custodian.

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TUSD’s stability took a hit as its value plunged to 0.9974 against Tether (USDT) on Binance, dropping even further to 0.80 on Binance.US due to its exposure to Prime Trust. As a result, the withdrawal of TUSD from the Binance launchpool of Maverick Protocol (MAV) has commenced. 

TUSD Deposit Rates Soar to 42% Amid Curve Pool Disruption

An alarming imbalance in reserves within the Curve pool has also emerged, with a staggering surge of over 70%. This disruption has further driven up the deposit and loan interest rates of TUSD on Aave V2, with deposit rates reaching an unprecedented 42% and loan rates skyrocketing to 54%.

These developments have prompted whales and investors to seize arbitrage opportunities by swapping their TUSD holdings for USDC and other stablecoins. Despite TUSD implementing a plunge protection mechanism with $20 million allocated to buy orders, maintaining a floor price of $0.997, an additional $21 million infusion would be necessary to drive it down to $0.70 on Binance.

FTX.US Audits’ Involvement with TUSD

Concerns about TUSD’s depegging risks have been echoed by notable figures in the crypto space, including Adam Cochran, The Wolf Of All Streets, and Parrot Capital, who took to Twitter to caution against potential pitfalls. Furthermore, The Network Firm (formerly Armanino), the auditing firm responsible for FTX.US audits, has provided attestation of TUSD’s reserves. 

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This revelation has raised eyebrows, as Adam Cochran astutely pointed out, considering the auditors’ involvement with TUSD audits after their association with the infamous FTX scandal, leading to a rebranding.

On the Flipside

  • Despite recent claims and concerns, TrueUSD maintains that it has no direct exposure to crypto custodian Prime Trust.
  • The withdrawal of TUSD from the MAV launchpool on Binance may be a precautionary measure rather than a direct consequence of the Prime Trust situation.
  • The attestation of TUSD’s reserves by The Network Firm, the auditing firm associated with the FTX scandal, does not automatically imply wrongdoing in the TUSD audits.

Why This Matters

TUSD’s repeated depegging incidents and its exposure to Prime Trust highlight stablecoins‘ challenges in maintaining their intended value. These events serve as a reminder of the risks associated with stablecoin stability and the importance of robust custodial arrangements within the crypto ecosystem.

To learn more about the growing demand for US dollar-backed stablecoins in Asia, read here:

Circle (USDC) Eyes Asia’s Growing Demand for US Dollar-Backed Stablecoins

To stay updated on the latest trends in stablecoin flow and its implications for crypto exchanges, read here:

Rising Stablecoin Flow Signals Growth on Crypto Exchanges

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.