On May 3, an unidentified address burned 405m TUSD, equating to 16.2% of the stablecoin’s $2.51b reserves, on Tron (TRX).
The incident was a source of curiosity across the board.
Here’s an analysis of this transfer, the community’s response, and potential ramifications for the cryptocurrency domain.
Tracing the transactions
In a Reddit thread, the burning commenced with transactions from two recognized addresses: a Binance hot wallet and the black hole address.
Four transactions totaling $230m TUSD were sent from the Binance hot wallet within 20 minutes.
The unidentified address received eight more transactions totaling $175.5m TUSD from the black hole address, pushing the number of burnt tokens to $405m.
An unusual chain of events
Token burning typically entails transferring assets to an “invalid” address, as it lacks a private key for securely signing transactions.
In this case, funds moved through an “intermediary address” that had executed similar transactions.
However, these transactions were strange because $175.5m TUSD was minted only to be burned minutes later.
Coinciding with Sui Network’s debut and TrueUSD’s muted response
The burning incident is a few hours following the launch of the Sui (SUI) Network, a blockchain project developed by former Meta engineers.
A critiquing tweet alleges that Binance CEO, Changpeng “CZ” Zhao mistakenly printed 500m TUSD on credit ahead of the SUI’s launch hype. His intention was to exchange TUSD, in bulk, for USDT at $0.98.
However, CZ reportedly botched his accounts and returned the TUSD instead of depositing USD.
Binance listed the SUI token with various pairs, including one with TUSD. Before launching, TUSD or BNB could be staked on the exchange for participation in the initial distribution of SUI.
TrueUSD, which claims to be “the most transparent stablecoin on the market,” is yet to release an official statement concerning the burning incident.
Community responses and hypotheses
The event couldn’t escape the eyes of curious Redditors, with many seeking to know why millions of TUSD were destroyed in bulk.
Some users propose that unbacked stablecoins were created, utilized to purchase other cryptocurrencies to inflate their prices, and subsequently burned to conceal any evidence.
This theory points to manipulative tactics in the cryptocurrency market, particularly affecting low-cap tokens.