"USD1 stablecoin by World Liberty Financial temporarily fell below dollar peg on Feb 23 due to a suspected attack. Despite structural differences with Terr
On February 23, the USD1 stablecoin, issued by World Liberty Financial (WLFI), briefly deviated from its dollar peg, falling to approximately $0.994 before recovering swiftly. The incident, which lasted mere minutes, resulted in the token trading close to parity once more. As of now, USD1 boasts a market capitalization of around $4.8 billion.
The disruption prompted speculation within the crypto community, with some drawing comparisons to early warning signs preceding the collapse of algorithmic stablecoins such as TerraUSD in 2022. However, it's worth noting that USD1 and TerraUSD differ structurally, with WLFI maintaining full 1:1 reserves unlike the latter's algorithmic design, which relied on arbitrage mechanisms rather than direct asset backing.
Within hours of the incident, WLFI issued a statement attributing the depeg to a coordinated attack. The company reported that unidentified individuals compromised several cofounder accounts, spread false information, and opened short positions in an attempt to profit from panic selling. Despite the managed recovery, the event has raised concerns across the cryptocurrency sector.
Unverified reports have circulated on social media platforms claiming that Eric Trump deleted older promotional posts related to USD1 during the volatile period. While screenshots of these posts have been shared online, no independent confirmation has yet verified these allegations.
Meanwhile, blockchain investigator ZachXBT made separate comments regarding the incident, but further details were not immediately available. The development marks another event in the ever-evolving world of cryptocurrency and its associated projects.
Major Crypto Company Investigated for Alleged Insider Trading: Details Emerge but Firm Remains Unnamed
In a breaking development, a senior newsroom editor revealed plans to disclose findings on alleged insider trading at an unidentified crypto company later this week. While the firm has not been named, speculation on social media platforms suggests possible involvement of WLFI. At present, there is no substantiated evidence linking WLFI to the allegations.
Stablecoins, such as USD1, rely heavily on investor confidence. A brief depeg incident involving USD1 today prompted rapid selling among users due to concerns over insolvency or reserve weakness. The swift recovery of USD1 suggests that redemption and liquidity mechanisms functioned effectively as designed.
However, this event underscores the swiftness with which market sentiment can change, particularly for newer stablecoins associated with high-profile figures. The ongoing situation surrounding WLFI serves as a reminder of the potential implications for credibility in the digital asset industry.
The company under investigation has yet to disclose technical details regarding the alleged incident. The forthcoming days, including any potential disclosures from the investigation, will likely determine whether this event remains a transient market shock or evolves into a broader test of confidence for USD1.
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