Huobi Stablecoin Depeged to $0.8, Huobi Explains Why

August 20, 2022

MCP News Free

Huobi Stablecoin Depeged to $0.8, Huobi Explains Why

Since the unexpected collapse of TerraUSD, quite a lot of investors have been doubting the stability of stablecoins available in the crypto market, and since the TerraUSD event, there have been some brief episodes that involve stablecoins losing their peg value, the latest event is HUSD.

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Houbi Stablecoin Depeged to $0.8

On Thursday, the stablecoin of Huobi Global lost its USD pegged value for 12 hours, it traded at $0.92 (according to CMC) while on some exchanges, it was trading at $0.85.

While this happened, several rumors have been flying around in the crypto space on what might have led to this event.

Two weeks ago, Sam Bankman-Fried FTX exchange withdraw its support for Huobi stablecoin from its crypto exchange, a statement from FTX back them reads;

“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.”

Crypto enthusiasts on social media say that the withdrawal of FTX support on HUSD shows that something is seriously wrong as regards the stablecoin.

Also, there were comments on the report that Leon Li was selling off a large percentage of his stake, people alleged that the depeg event is connected to Li’s move.

Huobi Explains Why

12 hours later, Huobi stablecoin resumed its USD pegged value, after which the company explained what led to the event on Twitter.

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.
— HTX (@HTX_Global) August 19, 2022

According to the company, the depeg event was caused by the “decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts,” which however led to a short-term liquidity crisis.

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