After TrustToken took a decision to temporarily halt the redemptions and mints of its TrueUSD stablecoin through Prime Trust, its banking partner, another trader has gone on to take advantage of this situation by initiating the on-chain short position.
According to the on-chain data, one user of Ethereum managed to utilize Aave’s v2 lending platform in order to deposit around 7.5 million USD Coin as collateral. They then managed to borrow 4 million TUSD and then sold it to USDC promptly. This particular strategy of borrowing and then selling it immediately has been employed frequently in order to create a short position on a particular asset.
TrueUSD’s Creator Has Canceled Partnership With Prime Trust
In the early part of June, the team from TrueUSD announced the suspension of the new TUSD minting through its partner, Prime Trust, which is a company based in Las Vegas. Subsequently, the Financial Institutions Division of the Nevada Department of Business and Industry put out a cease and desist order against Prime Trust.
As a response to this situation, the issuer of the stablecoin clarified that it did not affect the operations that were in concern with the conversion of fiat to stablecoin and vice versa. Through a statement, the issuer affirmed that it had not faced any exposure to Prime Trust and maintained multiple dollar rails for the redemption and minting of TrueUSD.
The wallet infrastructure provider and the digital asset custodian BitGo had previously signed a non-binding letter of intent to acquire Prime Trust- as mentioned in an announcement on 8th June. On 22nd June, BitGo further announced on Twitter that it had canceled its acquisition of Prime Trust. For those unaware, TrueUSD is the fifth-largest stablecoin after Tether, USDC, Dai, and BUSD.