Curve Finance, a decentralized exchange, is considering the removal of TrueUSD (TUSD) as collateral for its stablecoin crvUSD due to allegations of securities law breaches by the SEC. WormholeOracle’s proposal on the Curve governance forum suggests ceasing TUSD’s use due to its unstable history and legal challenges.
The proposed changes include reducing the upper limit of TUSD backing for crvUSD to zero, effectively removing it from the list of collateral tokens. The proposal also advises lowering the minting limit of crvUSD with another stablecoin, PYUSD from PayPal, from $15 million to $5 million, aiming to recalibrate reliance on each PegKeeper based on their significance within the pool.
The SEC’s actions against TrueCoin and TrustToken, the entities behind TUSD, revolve around fraudulent and unregistered sales of investment contracts involving TrueUSD. The regulatory body’s complaint accuses these entities of misleading investors by falsely marketing TUSD as fully backed by U.S. dollars or equivalents. However, it was revealed that a significant portion of the assets purportedly backing TUSD had been invested in a speculative offshore investment fund, creating additional risks for investors.
Due to these allegations, TrueCoin and TrustToken have come to a settlement where they are to pay fines and refrain from committing such offenses in the future under federal securities laws. This has raised concern among the DeFi community about the suitability of TUSD as a collateral for loans due to stability issues.
The reconsideration of TUSD’s role in backing Curve’s stablecoin underscores the broader implications of regulatory scrutiny in the decentralized finance sector. Curve’s crvUSD is supported by a variety of cryptocurrencies, including Ether and Wrapped Bitcoin, with the latter constituting the largest share of the stablecoin’s collateral at over $68 million in total value locked.
Read CRYPTONEWSLAND onBy potentially removing TUSD, Curve Finance aims to mitigate risks and enhance the robustness of its stablecoin against a backdrop of increasing regulatory actions. This move could set a precedent for other DeFi protocols to reevaluate their collateral compositions, particularly concerning assets under regulatory scrutiny.
Learn herein the perspectives of how the older and thus popular #cryptocurrencies, #bitcoin, #ether were…
Read about #Bitcoin, #Avalanche, #Chainlink, and other niches and #cryptocurrencies. What markets do they operate…
Ethereum whales offloaded 20,610 ETH worth $53.6M, as wallet 0x999 and 0xb8c made major moves…
Onyx Protocol loses $3.8M to hackers exploiting a known bug in its Compound Finance-derived code,…
Read about how strategic growth of #BinanceCoin, #Ripple, #Dogecoin, #Tron, and #Solana are contributing to…
Discover how #Qubetics transforms blockchain connectivity and learn about the upcoming presale opportunity. #QubeticsPresale #Web3…