Stablecoin TrueUSD Dips Below $1 Peg Following Major Outflows from Binance

The TrueUSD (TUSD) stablecoin has de-pegged from the $1 mark following significant outflows from cryptocurrency exchange Binance today, 16 January 2024.

TUSD below $1

TrueUSD witnessed a significant de-pegging dropping down to $0.9886 at the time of writing, with the stablecoin’s market capitalization falling below $2billion. This is the lowest that TUSD has fallen since launching around six years ago, prompting more concerns around the legitimacy of stablecoins.

In the early hours of today, observers noted the increased boom in sell-orders for TUSD, leading to a massive $484million in 24-hour volumes on Binance. 

Concerns surrounding the status of TUSD began surfacing on 10 January when it was found that there were difficulties in accessing real-time data concerning its reserves, indicating that the stablecoin was undercollateralized. This would mean that it did not have a 1-to-1 backing per TUSD token that was supposed to represent $1.

FDUSD – a new favorite?

Though the exact reasons remain somewhat unclear as to why TUSD is being aggressively exchanged for other assets, though mainly Tether (USDT), speculation around Binance’s focus on another stablecoin, First Digital USD (FDUSD) is sparking some discussion.

In March 2023, TUSD was heavily promoted by Binance following the failure of its own stablecoin, Binance USD (BUSD), which came as a result of regulatory troubles. But, matters were worsened when Binance removed its zero-fee promotion for the BTC/TUSD trading pair later that year in September, which resulted in TUSD losing its 23% market share.

Notably, rumours circulated that TUSD was also affected due to its exposure with crypto custodian PrimeTrust who filed for Chapter 11 bankruptcy in August 2023. According to data leading crypto market data firm, Kaiko, FDUSD gained massively during this period.

In December 2023, it seemed as though the writing was on the wall for TUSD after Binance announced zero-free trading across six major FDUSD spot and margin trading pairs, namely Binance Coin (BNB), DogeCoin (DOGE), Ethereum (ETH), Solana (SOL), Chainlink (LINK), and Ripple (XRP).

In January, concerns were also raised when the TUSD pairing was found to have been excluded from Binance’s latest launchpad for the MANTA token, instead discovering the FDUSD was there instead.

It is perhaps the snowballing effect of these events that resulted in Binance making the decision to slowly detach from TUSD in favor of FDUSD, but as is often the case in crypto, time will soon reveal the truth.