Huobi Stablecoin HUSD Repegged to U.S. Dollar After Falling Near 10%

Huobi stablecoin HUSD has repegged to U.S. dollar after its depeg on18, August. Huobi said that it was aware of the token’s liquidity issue.

 

Is the price of stablecoin climbing? It sounds like an oxymoron, but in the case of cryptocurrency exchange Huobi’s stablecoin HUSD, it’s back to a $1 peg today after destabilizing on Thursday, according to CoinMarketCap.

 

But if the collapse of Terra UST is any indication, it’s clear that almost anything can happen to cryptocurrencies, even assets that are widely considered “stable”.

 

While UST was an “algorithmic stablecoin” whose $1 peg was backed by code though a complex relationship with its sister token Luna (now Luna Classic), HUSD’s $1 peg is backed by a cash reserve, according to its issuer Stable Universal.

 

So how did HUSD slip? Blame a few bad apples.

 

“Recently, we had made the decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts,” HUSD’s Twitter account shared Friday.

 

“Due to the time difference in banking hours, this resulted in a short-term liquidity problem but has since been resolved.”

 

Huobi Global, the Seychelles-based crypto exchange behind HUSD, also issued a thread summarizing the incident.

 

“HUSD recovered its peg within 12 hours,” Huobi confirmed.

 

Although the situation may be good for HUSD now, this is not the first time the stablecoin has fallen more than a few cents. At one point in March 2020, it dropped to around $0.97.

 

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