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Huobi clarifies what went wrong with HUSD following stablecoin's return to form.

20-Aug-2022 By: Ashish Sarswat
Huobi clarifies what

According to the HUSD team, the depeg occurred as a result of them 

closing market maker accounts in particular countries in order to adhere to rules.

Crypto exchange Huobi gave users assurance that the short-term liquidity issue had been fixed after restoring the dollar peg for the HUSD stablecoin. HUSD began losing value on Thursday, trading at $0.92 at the beginning of the day and dropping as low as $0.82 a few hours later. Members of the community were disturbed by this and began to make predictions about what may occur if the stablecoin lost its dollar peg.

The stablecoin issuer, Stable Universal Limited, was contacted by the cryptocurrency trading platform in response to the worries, and it was reported right away that efforts were being made to restore stability. Before the day was out, the Ethereum-based stablecoin traded at $0.99 per HUSD, nearly regaining its dollar peg, before returning to $1 on Friday.

The HUSD team claims that the depeg was brought on by a move to terminate market maker accounts in particular regions in order to adhere to rules. The team claimed that the gap in banking hours caused by the time difference caused a liquidity issue, which caused HUSD to deviate from its peg.

After assuring its clients through an announcement that the problem had been fully resolved, Huobi recommended its users to exercise caution and to be mindful of any potential hazards resulting from the market's volatility.

The stablecoin, meantime, depegged by 99% after an exploit that created 1 billion Acala Dollars (aUSD) was discovered. The Acala team responded to the attack by freezing the hacker's wallet, casting doubt on the platform's decentralized promises. Eventually, a sizable fraction of the tokens that weren't collateralized may be recovered by the team.

As one of the funds that had profited from the TerraUSD (UST) depeg started to actively transfer sizable amounts of USDD in June, the USDD stablecoin also lost its dollar peg. The Tron DAO Reserve organised 700 million USD Coins (USDC) to defend the peg, therefore the depeg did not last for very long.

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