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Note that the USD1 stablecoin briefly lost its peg to the dollar on February 23, falling to around $0.994 before quickly recovering. The currency is now trading near parity, indicating that the disruption only lasted a few minutes.
USD1 was issued by World Liberty Financial (WLFI), a decentralized financial project linked to business entities linked to Donald Trump and his family. The stablecoin market capitalization is currently around $4.8 billion.
The de-pegging of World Liberty Financial’s stablecoin raises speculation
WLFI responded within hours. The company said the attackers compromised the accounts of several co-founders, distributed false information, and opened short positions to take advantage of the panic and mass selling.
The incident, despite a quick recovery, caused widespread concern in the cryptocurrency community.
Some users compared the sudden peg loss to early warning indicators that appeared before the collapse of algorithmic stablecoins such as TeraUSD in 2022.
However, USD1 is structurally different. WLFI says it maintains a full 1:1 reserve, in contrast to TeraUSD’s algorithmic design, which was based on arbitrage mechanisms rather than direct asset hedging.
At the same time, unconfirmed reports are spreading on social media that Eric Trump has removed old promotional posts linked to USD1 during the volatility.
Users have circulated screenshots online, but the claims have not been independently verified.
Blockchain researcher Zack XPT said he plans to release findings later this week regarding alleged insider trading involving a major crypto company.
He did not name the company. However, some social media users have speculated that WLFI may be involved. There is no evidence to support this claim at the time of writing.
Rely heavily on trust Stablecoins. Even a temporary break can lead to a quick sale if users fear bankruptcy or weak reserves.
The speed of the USD1 recovery suggests that recovery and liquidity mechanisms are working as designed. However, this incident reflects how quickly market sentiment can change, especially for new stablecoins linked to high-profile figures.
The company did not reveal the technical details of the alleged attack.
The coming days, including any investigative disclosures, will likely determine whether the event will remain a short-term market shock or turn into a broader reliability test for the USD1.
