Huobi-linked HUSD stablecoin depegs from USD

Another one bites the dust: HUSD stablecoin is trading for $0.85, and the lack of an official statement from the issuer sparks fears of a rug-pull.

A crack over the dollar banknote symbolizing loss of a peg.

HUSD is an ERC-20, HECO, TRC-20, and CRC-20 fiat-collateralized stablecoin issued by Stable Universal, a startup backed by Huobi Capital. However, in April 2022 Huobi exited its stake. The exchange tweeted that it was aware of the ongoing liquidity crisis regarding HUSD and said it would work together with the stablecoin issuer to find a solution to a crisis.

The depeg comes just two weeks after crypto exchange FTX removed the stablecoin from its USD basket. “HUSD will no longer be treated as part of the USD basket. Users will be able to deposit and withdraw HUSD if they wish; doing so will interact with distinct HUSD balances, not USD balances. HUSD deposits will not count towards USD balances and will not serve as collateral,” the announcement read.

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According to the Stable Universal website, HUSD can be redeemed on a 1:1 basis against the U.S. dollar. “It is designed to be easily redeemable and provides a tool for holders to reduce volatility when participating in the cryptocurrency market.”

The exact reason for HUSD remains unknown, and its official Twitter account still hasn't issued a statement regarding the incident, fueling investors’ panic. And the fact that the last tweet is dated 20 July only adds to the suspicion of a scam

“When ftx announced removing HUSD from the basket of USD two weeks ago, you could smell there’s something wrong,” a Twitter user commented.