An Aave’s v2 lending platform user has leveraged 7.5 million USDC as collateral, eyeing a potential profit amidst the temporary standstill in TrueUSD (TUSD) operations by TrustToken.

In the wake of TrustToken’s suspension of TUSD mints and redemptions via its banking partner, Prime Trust, an investor has adeptly navigated this disruption by placing a sizeable on-chain short position. As the blockchain data shows, the trader has utilized the v2 lending services offered by Aave, staking 7.5 million USD Coin USDC as collateral, then obtaining a 4 million TUSD loan which was instantly exchanged for USDC. Such a borrowing and immediate selling tactic is a common strategy to create a short position on a specific asset.

TrustToken announced earlier this month the pause in TUSD minting through its custodial associate, Prime Trust, headquartered in Las Vegas, Nevada. Following this, a cease-and-desist order was imposed on Prime Trust by the Financial Institutions Division of the Nevada Department of Business and Industry.

The issuer of TrueUSD made it clear in its response to the Prime Trust incident that it wouldn’t impact their stablecoin-fiat conversion operations. It emphasized, via a public statement, its lack of exposure to Prime Trust, while also confirming its maintenance of multiple channels for minting and redeeming TrueUSD.

Earlier, BitGo, the provider of wallet infrastructure and custodian of digital assets, expressed an intention to acquire Prime Trust, as revealed on June 8. However, it announced the cancellation of the acquisition on June 22 via Twitter.

After facing legal hurdles from the New York Department of Financial Services and the U.S. Securities and Exchange Commission over Binance USD (BUSD), its branded stablecoin, Binance decided to substitute its BUSD holdings with TUSD, propelling the latter’s popularity and usage.

As per CoinGecko, TUSD currently ranks as the fifth-largest stablecoin, trailing Tether, USDC, Dai, and BUSD, with a total market capitalization exceeding $3.1 billion.

Adding a bit of context to the situation, the crypto market has witnessed several cases in the past where sudden changes in a coin’s operations led to rapid strategic shifts by investors. This case underscores the importance of agility in the fast-paced cryptocurrency market. It also serves as a reminder for new traders that, amidst market uncertainties, opportunities can always arise for those who are quick to adapt to the ever-changing landscape. Remember, crypto investment is not just about long-term holds; short-term trading can also reap substantial benefits when handled with expertise and a keen eye on market happenings.