Story Highlights ~ TUSD
- Amid SEC accusations, Curve is considering removing TrueUSD (TUSD) from its crvUSD collateral pool.
- The SEC has raised concerns about TUSD’s stability after charging TrueCoin for falsely claiming full backing by U.S. dollars.
- Neither TUSD nor Justin Sun has commented publicly on these developments.
TUSD (TrueUSD) is currently facing several significant challenges, especially concerning its involvement with decentralized finance (DeFi) platforms like Curve Finance. The primary issue stems from regulatory scrutiny by the U.S. Securities and Exchange Commission (SEC), which accused TrueCoin, TUSD’s issuer, of misleading investors by falsely claiming full backing of the stablecoin by U.S. dollars. Instead, TrueCoin reportedly invested a substantial part of its reserves in risky offshore funds.
Due to these allegations, Curve Finance, is considering removing TUSD as collateral for its crvUSD stablecoin. The proposal, initiated by a community member, suggests reducing TUSD backing to zero. This would effectively eliminate TUSD’s role within the crvUSD system. The proposal also mentions concerns about overexposure to minor stablecoins like TrueUSD, which could destabilize Curve’s ecosystem.
Earlier depegging incidents have further strained TUSD’s reputation. The stablecoin briefly lost its 1:1 peg to the U.S. dollar, hence causing market volatility. If Curve Finance proceeds with removing TUSD from its collateral reserve, the consequences could ripple across the DeFi space. This could lead to decreased liquidity and usage of TrueUSD in decentralized platforms.
Furthermore recent transactions show that the majority of its supply has been transferred to HTX (formerly Huobi), raising concerns about its liquidity and relevance in the market. With a significant portion of TUSD’s total circulation now controlled by a crypto investor named Sun Ge and his team, observers speculate that the stablecoin is effectively “dead in name only.” The centralization of TUSD raises doubts about its future role in decentralized finance and its viability as a stablecoin.
Adding to the uncertainty, there has been no official statement from TrueUSD’s team or from Justin Sun, a prominent figure linked with TUSD, on this matter via their X (formerly Twitter) accounts. This lack of communication certainly only intensifies concerns surrounding the future of TUSD.
Consequences of TUSD’s Removal from Curve Finance
- Decreased Utility for TUSD: Being dropped from Curve would reduce TUSD’s utility and exposure in DeFi. A potential decrease in the stablecoin market share would be a consequence.
- Liquidity Challenges: TrueUSD holders may face challenges finding platforms that accept it as collateral, which could lead to diminished demand and liquidity.
- Increased Risk for Users: Users who rely on TrueUSD for stability might be forced to switch to alternative stablecoins..
- Impact on Confidence: Regulatory scrutiny and removal by a major DeFi protocol may erode market confidence in TrueUSD’s reliability as a stablecoin.