The popular cryptocurrency exchange, Huobiissued an official statement explaining the cause of a short-term liquidity problem that caused its stablecoin (HUSD) to lose its peg to the USD. It is important to note that HUSD has regained its peg and Huobi assured users that the issue has been fully resolved.
On August 18, 2022, HUSD lost its peg and traded at $0.92. It fell another $0.10 to trade at $0.82 a few hours later. An alarmed HUSD community member (John Paul Koning) tweeted that if HUSD did not regain its dollar peg, it would be the first fully reserved centralized stablecoin to fail.
HUSD was once one of the safest stablecoins. Now it’s off its peg. If HUSD doesn’t return to $1, it’d be the first fully-reserved centralized stablecoin to fail. pic.twitter.com/9WmROQR6lD
— John Paul Koning (@jp_koning) August 18, 2022
Following concerns from various members of the community, the exchange issued an official statement that the issuer of HUSD (Stable Universal Limited, SUL) is working to restore HUSD parity. Fortunately, SUL successfully ensured that the Ethereum-built stablecoin almost traded 1:1 with the USD, hitting $0.99 on Thursday night. As of early today, it was back to $1. It is worth noting that Huobi Capital bought a majority stake in SUL three years ago.
HUSD loses the perity with the USD
The HUSD team explained that their decision to close some market maker accounts in certain regions was the cause of the termination.. The team added that a closure was necessary as it was the best way to comply with regulations in those regions. They also said that the liquidity problem and the decoupling of HUSD arose due to the time difference in banking hours between those regions and the US.
However, the cryptocurrency exchange stated in a recent statement that it is confident that the issue has been permanently resolved. For this reason, he urged users to be aware of possible risks due to market volatility. Remember that Huobi announced earlier in the week that it would no longer offer its crypto derivatives trading services in New Zealand.
In a related development, the Acala network announced that it had frozen the wallet of the Hacker who illegally minted a billion dollar stablecoin Acala (aUSD). The exploit caused aUSD to lose its peg by 99 percent. However, industry analysts question whether the platform is truly decentralized when it can always freeze any user’s wallet. The Acala team successfully recovered most of the unsecured aUSD tokens through the freeze.
Two months ago, another stable coin (USD) it lost its peg to the USD after a fund that took advantage of the TerraUSD de-peg began transferring large amounts of USDD. However, the depeg was only temporary. The Tron DAO reserve generated 700 million USDC to restore USDD to USD parity. Tether’s aUSD, USDD, USDT and DEI stablecoins have all lost their USD pegs since the infamous terra network crash. However, all of them, except DEI, have recovered their parity with the dollar.
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