Trader takes $4M short position on TrueUSD as issuer halts mints and redemptions

Following TrustToken’s decision to temporarily halt mints and redemptions of the TrueUSD (TUSD) stablecoin through its banking partner, Prime Trust, one trader has taken advantage of the situation by initiating an on-chain short position.

According to on-chain data, an Ethereum user used Aawe’s V2 lending platform by depositing 7.5 million USDC, a stablecoin, as collateral. He then borrowed 4 million TUSD, another stablecoin, and immediately sold it for USDC. This strategy of borrowing and selling immediately is often used to establish a short position on a particular asset.

Earlier this month, the stablecoin issuer made an announcement regarding the suspension of new TUSD mining through its custodial partner, Prime Trust, a Las Vegas-based trust company. Subsequently, the Financial Institutions Division (FID) of the Nevada Department of Trade and Industry issued a cease and desist order against Prime Trust.

In response to Prime Trust’s position, the TrueUSD issuer clarified that this does not affect its operations related to converting fiat to stablecoin and vice versa. Through a statement, the issuer confirmed that they have no exposure to Prime Trust and maintain several USD rails for mining and redemption of TrueUSD, as where did it go in a tweet.

Wallet infrastructure provider and digital asset custodian BitGo previously signed a non-binding letter of intent to acquire fintech infrastructure provider Prime Trust, according to an announcement on June 8. However, on June 22, BitGo announced on Twitter that it had made the decision. Cancel the acquisition of fintech infrastructure provider Prime Trust.

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The adoption of TrueUSD (TUSD) by cryptocurrency exchange, Binance, following regulatory issues with its associated BUSD stablecoin, led to a significant increase in its usage. The TUSD stablecoin grew in popularity as a result.

TUSD Tether is the fifth largest stablecoin after USD (USDT), USD Coin (USDC), DAI and BUSD, with a slightly higher market capitalization. $3.1 billionAccording to CoinGecko.

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