Originally published on: September 25, 2024
Curve Finance, a prominent decentralized exchange (DEX), is contemplating removing TrueUSD (TUSD) from the list of tokens supporting Curve Stablecoin (crvUSD) following charges brought by United States regulators against TrueCoin, the issuer of TUSD, for violations of securities laws.
In a recent post on Curve’s governance forum, cross-chain messaging protocol Wormhole proposed reducing the upper limit on crvUSD’s TUSD backing to zero to eliminate exposure to TUSD due to regulatory risks and concerns about solvency.
Currently, the “PegKeeper” liquidity pool supporting crvUSD allows users to mint up to $10 million worth of crvUSD with TUSD. Additionally, the proposal suggests reducing the amount of crvUSD mintable with PayPal’s stablecoin, PYUSD, from $15 million to $5 million to ensure the appropriate level of reliance on each PegKeeper.
The SEC recently settled charges against TrueCoin and TrustToken for fraudulent and unregistered sales of investment contracts involving TrueUSD. The complaint alleges that TrueCoin and TrustToken falsely marketed TUSD as fully backed by U.S. dollars when, in reality, a substantial portion of the assets backing TUSD were invested in a speculative and risky offshore fund.
Curve’s crvUSD stablecoin is currently backed by various types of cryptocurrency collateral, with Wrapped Bitcoin (WBTC) making up the largest portion of collateral. Wrapped Staked Ether (wstETH) issued by Lido Finance follows closely behind, according to Curve’s documentation.
The proposal to remove TUSD as a backing for crvUSD highlights the need for a diverse range of PegKeepers to ensure stability and security for the decentralized exchange. Stay tuned for updates on this developing story.
