Stablecoin on Binance suddenly crashes after negative news

The past weeks has the crypto industry endure many problems, in particular with Binance. Unfortunately, the troubles are not over yet. The TrueUSD (TUSD) stablecoin lost yesterday on Binance.US namely its link to the dollar.

‘Problem’ with TrueUSD’s reserves

On Binance’s American subsidiary Binance.US, the stablecoin suddenly fell to 80 cents. The crash was caused, among other things, by the news that the company held $26,000 in collateral with a US custodian who was called upon to halt withdrawals. TrueUSD has much more collateral than that, at the time of writing $3.07 billion.

The project also received criticism because the auditor was The Network Firm, Armanino’s renamed subsidiary. Armanino was also the auditor of the bankrupt FTX. However, it should be emphasized that just like to banks, FTX also lied to auditors about its finances.

TUSD crashes on Binance.US

On Binance.US, this news was enough for a 20% de-peg. The link with the dollar has since been restored. The problems also turned out to only apply to Binance.US, on other exchanges the coin simply kept its link with the dollar.

The volume on Binance.US, meanwhile, was very low, especially for a stablecoin. “The (coin loses its peg) at a very low volume. Somebody wants to get rid of their coins,” tweeted Parrot Capital. Around the time of the crash, the volume was only about 700 USD, or 700 USDT actually. This other stablecoin simply remained stable.

It is not the first time that Binance.US has experienced strange price movements. Last week, bitcoin (BTC) on the crypto exchange was suddenly worth $ 138,000, while the price elsewhere was still below $ 30,000. This was due to a serious lack of volume.

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The US SEC’s indictment against Binance forced Binance.US to stop processing dollar deposits. The trading platform will soon only support cryptocurrencies. That is not a problem in principle, but it did cause a much lower trading volume. As a result, the market share of the platform collapsed. This is also believed to be the cause of TrueUSD’s crash.

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