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Issuer halts mints and redemptions, trader assumes $4M short position on TrueUSD

Issuer halts mints and redemptions, trader assumes $4M short position on TrueUSD

Reaction: The use of Aave’s v2 lending platform to establish a short position on TrueUSD highlights the potential risks and opportunities in the stablecoin market. It also underscores the importance of regulatory compliance and due diligence when dealing with stablecoin issuers and custodians.

Summary:

– An Ethereum user deposited 7.5 million USDC as collateral on Aave’s v2 lending platform and borrowed 4 million TUSD to establish a short position on TrueUSD.

– TrustToken temporarily halted mints and redemptions of TUSD through its banking partner, Prime Trust, due to a cease-and-desist order from the Nevada Department of Business and Industry.

– The TrueUSD issuer clarified that it has no exposure to Prime Trust and maintains multiple USD rails for the minting and redemption of TUSD.

– BitGo previously signed a non-binding letter of intent to acquire Prime Trust but cancelled the acquisition on June 22.

– TUSD is the fifth-largest stablecoin with a market capitalization of just over $3.1 billion, according to CoinGecko.

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