TUSD under attack following Prime Trust insolvency

Prime Trust’s insolvency has led traders to short TUSD despite claims it had “no exposure”

article-image

HFA_Illustrations/Shutterstock modified by Blockworks

share

Traders are rushing to short stablecoin TrueUSD.

The mounting short interest comes after cryptocurrency custodian Prime Trust could no longer fulfill withdrawal requests — and after BitGo yanked its bid to purchase Prime Trust. 

US-based Prime Trust — known for fiat to digital asset on- and off-ramps — had before that been struggling for cash and had recently been ordered by a Nevada financial regulator to half operations under a cease-and-desist order.

TUSD representatives have said the stablecoin is unaffected by the situation, claiming it had “no exposure” to Prime Trust and maintained “multiple USD rails for minting and redemption.”

Protos reported earlier this week that TUSD had paused routine attestations of the stablecoin, and no shortage of traders have continued to place short bets against it since. 

On Aave, traders are paying up to 50% APY to short the asset, with one user placing a $4 million short on the stablecoin.

Loading Tweet..

The TUSD Curve Pool shows similar signs — with its currency reserves reaching 61%

A Twitter user who goes by etheraltog, noted that users attempting to redeem TUSD are getting it re-minted to their wallets.

Loading Tweet..

TUSD slightly depegged from the dollar but regained its $1 peg through midday Friday.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

Waka Flocka Flame-linked BaseDrop is raising some eyebrows

article-image

IPO’ing onchain, Ethereum scaling, and using AI for ZK

article-image

A Brexit-themed celebration of Bitcoin’s catchphrases

article-image

Judge Analisa Torres said the parties have not demonstrated that vacating her prior ruling is in the best interest of the public

article-image

Prediction markets have found a mainstream fit

article-image

Money for enemies isn’t fun, but crypto can be