A trader has opened an on-chain short position on the stablecoin TrueUSD (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.
The stablecoin's issuer announced earlier this month that it had halted the minting of new TUSD via its custodial partner, Prime Trust, a Las Vegas-based trust company. More recently, the Nevada Department of Business and Industry’s Financial Institutions Division (FID) issued a cease-and-desist order against Prime Trust.
The TrueUSD issuer said in a statement the Prime Trust situation does not impact its operations related to the firm's fiat to stablecoin on- and off-ramps. “We have no exposure to Prime Trust and maintain multiple USD rails for minting and redemption," it tweeted.
TUSD is the fifth largest stablecoin after Tether USD (USDT), USD Coin (USDC), DAI, and BUSD, with a market capitalization of just over $3.1 billion, according to CoinGecko.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.