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CDS Crypto News Ethereum User Takes Advantage of TrueUSD Controversy with On-Chain Short Position on Aave’s v2 Platform

Crypto News

Ethereum User Takes Advantage of TrueUSD Controversy with On-Chain Short Position on Aave’s v2 Platform

In the wake of TrustToken's temporary suspension of TrueUSD (TUSD) stablecoin mints and redemptions through its banking partner, Prime Trust, a savvy trader has seized the opportunity to initiate an on-chain short position.

Ecem ALKAN24/06/20231 Mins read599

Ethereum User Takes Advantage of TrueUSD Controversy with On-Chain Short Position on Aave’s v2 Platform

In the wake of TrustToken‘s temporary suspension of TrueUSD (TUSD) stablecoin mints and redemptions through its banking partner, Prime Trust, a savvy trader has seized the opportunity to initiate an on-chain short position.

As per on-chain data, an Ethereum user leveraged Aave’s v2 lending platform by depositing 7.5 million USDC as collateral. They subsequently borrowed 4 million TUSD and promptly sold it for USDC, employing a common strategy to establish a short position on a specific asset.

Earlier this month, the TrueUSD team announced the suspension of new TUSD minting via their custodial partner, Prime Trust, a Las Vegas-based company. Following this, the Financial Institutions Division of the Nevada Department of Business and Industry issued a cease-and-desist order against Prime Trust.

In response to the Prime Trust situation, the TrueUSD issuer clarified that it has no impact on their operations related to the conversion of fiat to stablecoin and vice versa. The issuer confirmed through a statement that they have no exposure to Prime Trust and maintain multiple United States dollar rails for the minting and redemption of TrueUSD, as expressed in a tweet.

Previously, the wallet infrastructure provider and digital asset custodian BitGo had expressed intent to acquire Prime Trust, as announced on June 8. However, on June 22, BitGo took to Twitter to announce the cancellation of their acquisition plans for Prime Trust.

Following legal actions by the New York Department of Financial Services and the U.S. Securities and Exchange Commission against Paxos Trust, the issuer of the Binance-branded Binance USD stablecoin (BUSD), Binance replaced its BUSD holdings with TUSD. This move significantly boosted the usage and popularity of TUSD.

With a market capitalization of slightly over $3.1 billion, TUSD currently ranks as the fifth-largest stablecoin after Tether, USDC, Dai, and BUSD, according to CoinGecko.