TrueUSD Market Cap Collapse Raises Peg Concerns

TrueUSD's Market Cap Plunges, Raising Questions

Is TrueUSD Losing Its Peg?

TrueUSD, the stablecoin linked to Justin Sun, has witnessed a precipitous decline in its market capitalization, plummeting by over 50% from $1.29 billion on March 15 to a mere $615 million on March 22. This sharp drop has followed Binance's decision to delist several TrueUSD trading pairs on March 15.

Where Did the Reserves Go?

A closer examination of TrueUSD's credentials reveals a curious shift in its reserve composition. US Treasuries, once a cornerstone of its backing, are now conspicuously absent. Instead, the remaining funds are dispersed among "a depository institution in Hong Kong, a depository institution in Switzerland and depository institutions in the Bahamas," amounting to approximately $200 million. The bulk of the reserves, around $500 million, is held by First Digital Trust Limited.

First Digital Trust's FDUSD: A Cause for Concern?

Coincidentally, First Digital Trust Limited has launched its own stablecoin, FDUSD, which has also suffered a significant decline in market cap. Since March 2, FDUSD has shed roughly $12 billion, dropping from a peak of $15 billion to its current value of $3 billion.

Is the Stablecoin Market Divided?

Despite the setbacks faced by TrueUSD and FDUSD, the stablecoin market as a whole has not been uniformly impacted. Tether, for instance, has seen its market cap surge by approximately $700 million since March 15, demonstrating resilience amidst the turbulence.