TrueUSD loses dollar peg after minting suspension with Prime Trust.
The stablecoin TrueUSD, which is backed by fiat currency, has lost its value peg after it was announced that the minting of TrueUSD tokens had been suspended through its technology partner Prime Trust.
On Saturday, TrueUSD started to move away from its intended $1 value, dropping to as low as $0.993090 before recovering slightly, according to data by CoinGecko.
Currently, the stablecoin is trading at $0.997351, a 0.2% drop over the past day, and a 0.4% drop over the past week.
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The drop in value occurred after the TrueUSD team revealed that the minting of tokens via Prime Trust had been paused until further notice. However, the minting and redemption services of TrueUSD through other banking partners are not affected.
“We want to assure you that our partnerships with other banking institutions remain intact, allowing for seamless transactions,” the team said in a thread on Twitter on Saturday.
“Your ability to mint and redeem TUSD tokens will not be impacted by these changes. We are committed to providing a reliable and efficient service for all your TUSD needs.”
TrueUSD is a stablecoin that runs on the Ethereum network and was launched in 2018. It aims to maintain a value of $1.00.
With a market cap of over $2 billion, TrueUSD is the fifth largest stablecoin in the market, behind USDT, USDC, BUSD, and DAI.
Last year, TrueUSD and other major stablecoins lost a significant portion of their market cap following the collapse of algorithmic stablecoin TerraUST. While most stablecoins have not fully recovered from the 2020 meltdown, Tether has regained the market value it lost last year.
As reported, Tether’s market cap reached $83.2 billion, a new all-time high, last week, recovering the $20 billion in market value it lost following the collapse of rival stablecoin TerraUSD.
Prime Trust Considers a Sale Amid Insolvency Rumors
The reason behind the halt in minting TrueUSD tokens through Prime Trust is unclear, but it may be related to recent rumors of insolvency surrounding the company.
Prime Trust, a fintech infrastructure provider based in Nevada, laid off a third of its staff in January. Last week, it was revealed that BitGo has signed a letter of intent to acquire Prime Trust as part of the company’s plans to take its digital asset and fintech infrastructure services global.
With the acquisition, BitGo will acquire Prime Trust’s payment rails and cryptocurrency IRA fund, allowing it to expand its wealth management services. The terms of the agreement were not disclosed.
The potential acquisition comes as the US Securities and Exchange Commission is proposing rule changes limiting the ability of crypto companies to act as a customer’s custodian.
