A stablecoin’s price is climbing? Sounds like an oxymoron, but in the case of crypto exchange Huobi’s stablecoin HUSD, it’s back up to its $1 peg today after destabilizing Thursday, according to data from CoinMarketCap.
But if the Terra UST debacle was any indication, it’s clear that just about anything can happen in crypto, even to assets widely thought of as “stable.”
While UST was an “algorithmic stablecoin” whose $1 peg was backed by code though a complex relationship with its sister token Luna (now Luna Classic), HUSD’s $1 peg is backed by a cash reserve, according to its issuer Stable Universal.
So how did HUSD slip? Blame a few bad apples.
“Recently, we had made the decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts,” HUSD’s Twitter account shared Friday.
“Due to the time difference in banking hours, this resulted in a short-term liquidity problem but has since been resolved.”
Recently, we had made the decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts. Due to the time difference in banking hours, this resulted in a short-term liquidity problem but has since been resolved.
— HUSD (@Stablecoin_HUSD) August 19, 2022
Huobi Global, the Seychelles-based crypto exchange behind HUSD, also issued a thread summarizing the incident.
“HUSD recovered its peg within 12 hours,” Huobi confirmed.
Overview of the HUSD incident:
On Aug 18 at 10:05 (UTC), Huobi detected unusual price fluctuations of HUSD.
At 10:10 (UTC), we contacted Stable Universe Limited, the issuer of HUSD.
At 10:30 (UTC), we confirmed the cause with the issuer and worked together on a solution.
— Huobi (@HuobiGlobal) August 19, 2022
While things may be well and good with HUSD now, it isn’t the first time the stablecoin has slipped more than a few cents. In March 2020, it briefly fell to about $0.97.
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