The TrueUSD (TUSD) stablecoin has temporarily stopped its automated attestations due to potential balance inconsistencies.
Last week, the stablecoin project faced some issues. The attestation process for TrueUSD, which is a stablecoin backed by US dollars, has encountered problems.
Due to a potential mismatch in balances, the team has suspended the automated attestations that provide transparency about the fiat currency reserves of TUSD tokens.
Sources suggest that TrueUSD’s attestation system includes a ripcord feature that alerts users to any abnormalities affecting real-time reserve attestations.
The Network Firm, founded by former Armanino executives, is responsible for TrueUSD’s attestation. Sources indicate that the ripcord of TrueUSD has been triggered.
In various circumstances, such as an imbalance between TrueUSD’s obligations and asset, this ripcord activates to adresss a temporary mismatch.
TrueUSD’s management ripcord was also pulled on June 10. The company attributed the issue to technical difficulties during a test minting by TrueUSD’s new banking partner.
Earlier this month, TrueUSD briefly halted all redemptions and minting associated with Prime Trust as Prime Trust finalized an acquisition agreement with BitGo.
However, the stablecoin issuer has assured customers that alternative redemption and minting methods are still available. The incident caused the TUSD stablecoin to lose parity with the USD briefly.
Uncertainty surrounding Stablecoin stability
Apart from federally insured US depository institutions, TrueUSD claims to hold funds supporting its TUSD tokens in circulation in a Hong Kong depository institution (previously First Digital Trust but undisclosed), a Bahamian depository institution (formerly Capital Union Bank but undisclosed), and a Swiss depository institution.
Since the failure of Do Kwon’s Terra algorithmic stablecoin project in May 2022, stablecoins have received increased regulatory attention. While market leaders like Tether (USDT) and Circle’s USDC have remained stable despite challenging market conditions, it remains uncertain whether the crypto world will witness another significant stablecoin depeg event.
