Trump-linked stablecoin wobbles as WLFI says it's under 'coordinated attack'
TL;DR
USD1 stablecoin linked to Trump family briefly depegged to $0.994 amid a 'coordinated attack' involving hacked accounts and market manipulation. The token recovered to $0.998 thanks to its dollar-for-token redemption feature, highlighting the importance of direct convertibility for stablecoin resilience.
Key Takeaways
- •USD1 stablecoin experienced a brief depeg to $0.994 (0.6% below $1) before recovering to $0.998
- •Project developers claim hackers compromised cofounder accounts, paid influencers to spread fear, and opened short positions on WLFI to trigger panic
- •The dollar-for-token redemption mechanism helped maintain confidence and prevent a deeper or prolonged depeg
- •USD1 is backed 1:1 by U.S. government treasuries, dollar deposits, and cash equivalents with $5 billion market capitalization
- •The incident underscores how direct convertibility remains critical to stablecoin resilience against market attacks
What to know:
- USD1 fell as low as $0.994 (0.6% below peg) before recovering to around $0.998.
- The project claims hackers compromised cofounder accounts, paid influencers to spread fear, and opened short positions on WLFI in an attempt to trigger panic and profit from volatility.
- Developers credited USD1’s dollar-for-token redemption feature with helping maintain confidence and prevent a deeper or prolonged depeg, underscoring how direct convertibility remains critical to stablecoin resilience.
- USD1 fell as low as $0.994 (0.6% below peg) before recovering to around $0.998.
- The project claims hackers compromised cofounder accounts, paid influencers to spread fear, and opened short positions on WLFI in an attempt to trigger panic and profit from volatility.
- Developers credited USD1’s dollar-for-token redemption feature with helping maintain confidence and prevent a deeper or prolonged depeg, underscoring how direct convertibility remains critical to stablecoin resilience.
USD1, the U.S. dollar stablecoin of World Liberty Financial — a crypto protocol with close links to President Donald Trump’s family — slipped from its $1 peg on Monday amid what the project’s developers described as a "coordinated attack" against the protocol.
The token fell to as low as $0.994 during the day, some 0.6% from its intended $1 anchor, CoinGecko data shows.
In a Monday X post, the team behind USD1 said multiple cofounder accounts were hacked, influencers were paid to sow doubt, and short positions were opened against the protocol’s native token, WLFI, in what they framed as a deliberate effort to stir panic and profit from it.
"It didn’t work," the post said, saying that a redemption mechanism that allows USD1 holders to exchange their tokens for an equal amount of U.S. dollars as the reason the peg held firm.
However, the token still traded at $0.998, some 0.2% below its intended $1 price anchor, CoinGecko shows, which gathers price data from exchange pairs.
USD1, issued in partnership with crypto custodian BitGo (BITG) is among the largest dollar-backed stablecoins. Its value is backed 1:1 by short-term U.S. government treasuries, U.S. dollar deposits and other cash equivalents and reports monthly attestations of its reserve signed by consulting firm Crowe, according to BitGo. The token currently has a $5 billion market capitalization, but it still trails major players like Tether's USDT USDT$1.0001 and Circle's (USDC).
Read more: Goldman Sachs, Franklin Templeton, and Nicki Minaj: Inside Trump’s surreal Mar-a-Lago crypto summit
UPDATE (Feb. 23, 16:00 UTC): Adds details about USD1's backing.
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