An intriguing chain of events recently transpired in the world of cryptocurrencies, as 405 million TUSD, or roughly 16.2% of the stablecoin’s $2.51 billion reserve held on the Tron (TRX) network, were burned on May 3 by an anonymous address. The unusual incident spurred discussions across the crypto community, prompting an analysis of the transfer alongside reactions to the unexplained burn.
The origin of the burned TUSD can be traced to four transactions totaling $230 million, sent from a Binance hot wallet to an unrecognized address within 20 minutes. Additionally, eight more transactions amounting to $175.5 million TUSD were sent from a known “black hole” address. Token burning generally involves transferring assets to an unspendable or “invalid” address, which lacks a private key to authenticate transactions safely.
Interestingly, the funds in this instance traversed an intermediary address responsible for executing similar transactions in the past. However, the transfer raised eyebrows given $175.5 million TUSD was created solely for burning mere minutes later. The incident happened just hours after the launch of the Sui (SUI) Network, a blockchain project spearheaded by former Meta engineers.
A tweet critical of Binance CEO Changpeng “CZ” Zhao claimed he mistakenly printed 500 million TUSD in credit in anticipation of the SUI launch hype, hoping to swap TUSD for USDT at $0.98. Nevertheless, CZ allegedly erred in his accounts and returned the TUSD instead of depositing USD.
As Binance listed SUI tokens along with TUSD, speculation has grown about the motives behind the massive TUSD burn. TrueUSD, which prides itself on being “the most transparent stablecoin on the market,” has yet to issue an official statement regarding the burn.
Crypto enthusiasts on Reddit are left pondering the reasons behind the bulk destruction of millions of TUSD. Some users speculate the unbacked stablecoins were created to purchase other cryptocurrencies, inflate their prices, and then be burned later, effectively erasing any evidence. This theory alludes to the possibility of manipulative strategies in the cryptocurrency market, particularly impacting low-cap tokens. The ramifications of this event, be they positive or negative, could alter the cryptocurrency landscape, and the hunt for answers continues.