Following TrustToken's decision to temporarily halt minting and redemptions of its TrueUSD (TUSD) stablecoin through its banking partner Prime Trust, a trader took advantage of the situation by initiating a short position on-chain.
According to the chain's data, an Ethereum user used Aave's v2 lending platform for depositing $7.5 million in coins (USDC) As collateral. They then borrowed 4 million thousand dollars and quickly sold it for USDC. This borrow and sell immediately strategy is often used to establish a short position in a particular asset.
Earlier this month, the TrueUSD team announced the suspension of new TUSD minting through its escrow partner, Prime Trust, a company based in Las Vegas, Nevada. Subsequently, the Division of Financial Institutions of the Nevada Department of Business and Industry issued a cease and desist order against Prime Trust.
In response to the Prime Trust situation, the TrueUSD issuer clarified that it does not affect its operations regarding the conversion from fiat to stablecoin and vice versa. Through a statement, the issuer stated that it has no exposure to Prime Trust and maintains multiple US dollar riels for TrueUSD minting and redemption, as fixed in a tweet.
Wallet infrastructure provider and digital asset custodian formerly BitGo signed a non-binding letter of intent to acquire Prime Trust, according to a June 8 announcement. However, on June 22, BitGo announced on Twitter that it had decided to cancel its acquisition from PrimeTrust.
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After legal action by the New York Department of Financial Services and the US Securities and Exchange Commission vs. Binance-branded Binance USD (BUSD) and its issuer, Paxos Trust, Binance replaced its holdings of BUSD with TUSD, leading to a significant increase in its usage and popularity.
TUSD is the fifth largest stablecoin after Tether (USDT), USDC, Daily (ICD) and BUSD, with a market capitalization of just over $3.1 billion, according to CoinGecko.
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