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Trump-Linked USD1 Stablecoin Briefly Depegs, WLFI Under Fire

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Trump-Linked USD1 Stablecoin Briefly Depegs, WLFI Under Fire

The USD1 stablecoin briefly lost its dollar peg on February 23, falling to around $0.994 before quickly recovering. The token now trades close to parity, suggesting the disruption lasted only minutes.

USD1 is issued by World Liberty Financial (WLFI), a DeFi project linked to business entities associated with Donald Trump and his family. The stablecoin currently has a market capitalization near $4.8 billion.

USD1 Price Chart. Source: CoinGecko

World Liberty Financial’s Stablecoin Depeg Triggers Speculation

WLFI responded within hours. The company said attackers compromised several cofounder accounts, spread false information, and opened short positions to profit from panic selling.

Despite the rapid recovery, the incident triggered widespread concern across the crypto community. 

Some users compared the sudden depeg to early warning signs seen before the collapse of algorithmic stablecoins such as TerraUSD in 2022.

However, USD1 differs structurally. WLFI says it maintains full 1:1 reserves, unlike TerraUSD’s algorithmic design, which relied on arbitrage mechanisms rather than direct asset backing.

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Meanwhile, unverified reports circulated on social media claiming that Eric Trump deleted older promotional posts related to USD1 during the volatility. 

Screenshots have circulated online, but no independent confirmation has verified these claims.

Separately, blockchain investigator ZachXBT said he plans to release findings later this week on alleged insider trading involving a major crypto company. 

He did not name the firm. Still, some social media users speculated that WLFI could be involved. There is no evidence supporting this claim at the time of writing.

Stablecoins rely heavily on confidence. Even brief depegs can trigger rapid selling if users fear insolvency or reserve weakness.

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USD1’s quick recovery suggests that redemptions and liquidity mechanisms functioned as designed. Nevertheless, the incident reflects how quickly market sentiment can shift, especially for newer stablecoins tied to high-profile figures.

The company has not disclosed technical details of the alleged attack.

The coming days, including any investigation disclosures, will likely determine whether the event remains a short-lived market shock or develops into a broader credibility test for USD1.

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Crypto World

South Korea Tightens Crypto Rules with 5-minute Asset Verification Mandate

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South Korea Tightens Crypto Rules with 5-minute Asset Verification Mandate

South Korea has ordered all crypto exchanges to reconcile their internal ledgers with actual asset holdings every five minutes after an inspection uncovered weaknesses in internal controls.

The directive was announced on Monday by the Financial Services Commission (FSC) after a meeting with top crypto exchanges and the Digital Asset Exchange Alliance (DAXA), during which they discussed the findings of an emergency inspection triggered by the Bithumb payout incident.

The inspection found that three of the country’s five major exchanges were reconciling balances only once every 24 hours, limiting their ability to respond quickly to discrepancies. Systems designed to halt trading during major mismatches were also found to be insufficient, raising concerns about how exchanges would handle large-scale errors.

In February, Bithumb mistakenly distributed 620,000 Bitcoin (BTC) to 249 users during a promotional event. The exchange later announced that it recovered 99.7% of the funds the same day. The remaining 0.3%, 1,788 BTC that had already been sold, was covered using company reserves.

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Related: Bithumb seeks to reappoint CEO despite recent controversies: Report

South Korea mandates five-minute asset checks

Under the new measures, exchanges must implement automated ledger-to-wallet reconciliation systems operating on a five-minute cycle. They will also be required to introduce defined criteria for triggering automatic transaction halts in the event of significant discrepancies.

Beyond reconciliation, regulators are pushing for sweeping changes to internal operations. High-risk processes like promotional payouts will require stronger oversight, including third-party cross-checks and multi-level approval systems. Exchanges will also need to separate high-risk accounts and implement automated verification tools for payments.

Top Korean crypto exchanges. Source: CoinGecko

Furthermore, external audits will shift from quarterly to monthly, while disclosures will expand to include detailed asset balances by wallet and ledger.

“The financial authorities and the DAXA plan to complete the rule changes needed to implement the improvement measures within April this year,” the FSC wrote.

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Related: South Korean brokerage Korea Investment & Securities eyes Coinone stake: Report

Bithumb delays IPO to post-2028

Last week, Bithumb announced it is now targeting an IPO after 2028, marking another delay from its earlier 2025 plans as it works through restructuring and regulatory pressure. The exchange said it will focus on strengthening accounting policies and internal controls through 2027, following an advisory agreement with Samjong KPMG.

Meanwhile, Naver Financial has also delayed its planned share swap with Dunamu by about three months, now targeting a shareholder vote on Aug. 18 and completion by Sept. 30.

Magazine: South Korea gets rich from crypto… North Korea gets weapons

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