TrueUSD is a stablecoin built on the Ethereum blockchain (ERC20) that maintains a 1:1 peg with the US dollar. It ensures full collateralization, meaning that for every issued TrueUSD token, there is an equivalent amount of USD held in reserve. This collateralization offers stability and confidence to users.
The company behind the stablecoin stated recently that it had no financial involvement or risk exposure related to the crypto custodian Prime Trust, which experienced a failure or setback.
According to the audit conducted by The Network Firm on June 23, it was discovered that TrueUSD (TUSD) had $26,434 worth of assets backing its stablecoin held at a U.S. depository institution. However, the depository institution informed its customers that it had been instructed by state regulators to temporarily suspend deposits and withdrawals for both fiat and digital asset accounts.
Out of the total funds, $26,269 were specifically attributed to customer withdrawals for redeemed tokens. This indicates that a significant portion of the funds were intended for customers who had redeemed their TUSD tokens and were awaiting withdrawal.
The Network Firm did not provide specific information regarding the U.S. institutions where the funds backing TrueUSD (TUSD) were held. However, it is worth nothing that the TUSD issuer had previously stated that it had no financial involvement with or risk exposure to the collapsed crypto custodian Prime Trust. Prime Trust had previously served as the banking partner for the stablecoin in the United States.
In a tweet, the TUSD issuer announced that it had temporarily halted the creation of new TUSD tokens through Prime Trust as of June 10. However, it reassured users that the minting and redemption services for TUSD remained unaffected by alternative banking channels. This suggests that while Prime Trust’s involvement had ceased, other banking rails were still operational for the minting and redemption processes of the stablecoin.
On Thursday, Prime Trust, the crypto custodian, temporarily suspended withdrawals and received an order from regulators in Nevada to cease its operations. The decision came as a result of a “shortfall in customer funds,” indicating that there was a discrepancy or insufficiency in the funds held on behalf of Prime Trust’s customers.
Prime Trust, LLC, is a trust company that leverages technology in its operations. It provides various services, including custody of digital assets, tokens, and FIAT currencies; funds processing; compliance with anti-money laundering regulations; knowing your customer’s requirements; and transaction technology solutions.