Trader opens $4 million short on the TUSD stablecoin on Aave
A trader has opened an on-chain short position on the stablecoin TUSD after the issuer had to pause mints and redemptions through one of its banking partners, Prime Trust.
An Ethereum user deposited 7.5 million USDC, another stablecoin, as collateral on Aave’s V2 lending platform. They used this to borrow 4 million TUSD and immediately sold them for USDC, per on-chain data. Borrowing and immediately selling is a common tactic to take a short position on a specific asset.
TrueUSD announced earlier this month that it had halted the minting of new TUSD coins via Prime Trust, a Las Vegas-based trust company. More recently, the Nevada Department of Business and Industry’s Financial Institutions Division (FID) recently issued a cease-and-desist order against Prime Trust.
“We have no exposure to Prime Trust and maintain multiple USD rails for minting and redemption,” said TrueUSD.
The TUSD stablecoin itself saw a surge in use after cryptocurrency exchange giant Binance adopted it, following regulatory complications with the exchange’s associated BUSD stablecoin.
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Author: Vishal Chawla
