TrueUSD halts USD attestations amid balance discrepancies

The TrueUSD (TUSD) stablecoin has temporarily paused its automated attestations due to possible balance discrepancies. The stablecoin project also encountered some glitches last week.

TrueUSD (TUSD), a US dollar-backed stablecoin project, has encountered a challenge in its attestation process. The automated attestations, which provide transparency about the fiat dollar reserves of TUSD tokens, have been paused due to a possible discrepancy in its balances.

According to sources, TrueUSD’s attestation system has a ripcord feature, which notifies users of any anomaly that could hamper real-time reserve attestations. 

TrueUSD’s attestation is currently handled by the Network Firm, established by former Armanino execs. Sources say the TrueUSD balances ripcord has been triggered, a scenario that only occurs when there is a temporary discrepancy that may be caused by certain factors, including an actual imbalance between TrueUSD’s liabilities and assets.

According to recent reports, TrueUSD’s management ripcord was also triggered on June 10. The company claimed the incident was due to technical issues resulting from a test minting by TrueUSD’s new banking partner.

Earlier this month, TrueUSD temporarily suspended Prime Trust-related redemptions and minting, as the latter is reportedly in the process of striking an acquisition deal with BitGo. However, the stablecoin issuer has assured users that alternative redemption and minting options are still available. The event forced the TUSD stablecoin to lose parity with the USD temporarily.   

TrueUSD claims the funds backing its TUSD tokens in circulation are held at various locations, including federally-insured US depository institutions, a Hong Kong depository institution (previously First Digital Trust but undisclosed presently), a Bahamian depository institution (previously Capital Union Bank but undisclosed presently), and a Swiss depository institution. 

Since the collapse of Do Kwon’s Terra algorithmic stablecoin project in May 2022, stablecoins have attracted increased regulatory scrutiny. While the market leaders such as Tether (USDT) and Circle’s USDC have remained solid amid gloomy market conditions, whether another catastrophic stablecoin depeg event will occur in the crypto space remains to be seen.