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Amidst the sudden halt of TrueUSD (TUSD) stablecoin minting and redemptions by issuer TrustToken, an astute investor recognized an opportunity and capitalized on the chaos. With TrustToken's banking collaborator, Prime Trust, facing a cease-and-desist order, this investor strategically took a short position.
In the complex digital landscape, the investor utilized 7.5 million USD Coin (USDC) as collateral on Aave's v2 lending platform, a popular Ethereum-based protocol. Borrowing 4 million TUSD, they promptly exchanged it for USDC, a tactical move commonly employed when establishing a short position.
The unexpected halt of TUSD minting through Prime Trust earlier this month sent shockwaves through the stablecoin market. However, TrustToken reassured users that the issues faced by Prime Trust had no impact on their ability to convert between fiat and TUSD, as TrustToken operates multiple USD channels for TUSD minting and redemption, independent of Prime Trust.
In another twist, BitGo, a custodian of digital assets and wallet infrastructure provider, rescinded its intention to acquire Prime Trust. The preliminary agreement, announced on June 8, was publicly revoked on June 22.
The situation extended beyond the TUSD market. In response to regulatory actions against its Binance-branded Binance USD (BUSD) stablecoin by the U.S. Securities and Exchange Commission and New York's Department of Financial Services, Binance switched its BUSD holdings to TUSD, leading to a surge in TUSD's popularity.
Currently, TUSD ranks fifth among stablecoins, following USDT, USDC, BUSD, and DAI, with a market cap exceeding $3.1 billion.
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