Binance US, a prominent cryptocurrency exchange, recently witnessed the depegging of stablecoins Tether (USDT) and USD Coin (USDC), as the crypto market grapples with a wave of hacks and exploits. Over the past week, the market suffered losses amounting to $128 million due to these malicious activities. Consequently, two major stablecoins experienced significant drops on the Binance US platform, raising concerns about the stability of these digital assets.
On July 9, around 00:00 UTC, Tether (USDT), the largest stablecoin by market capitalization, deviated from its peg to the US dollar and plummeted to an alarming low of $0.8800. Similarly, Circle’s USD Coin (USDC), a prominent rival stablecoin, also faced a sharp decline, reaching $0.8050 on the same day. This depegging event sent shockwaves through the crypto market, highlighting vulnerabilities and potential risks associated with stablecoins.
The primary cause of this depegging event can be traced back to the Multichain hack, which unfolded on July 7. The crypto market experienced a series of hacking and phishing attacks, resulting in substantial financial losses. While some attacks had no direct financial impact, such as the Aptos incident, others resulted in a significant loot of $126 million, leading to concerns about the security and trustworthiness of the crypto ecosystem.
The depegging of Tether (USDT) and USD Coin (USDC) on Binance US is a direct consequence of the Multichain hack. Multichain, formerly known as Anyswap, is a cross-chain protocol that facilitates crypto transfers across multiple blockchain networks via bridges. During the hack, the protocol’s Fantom Bridge was exploited, affecting various assets including Wrapped Bitcoin (WBTC), wrapped Ethereum (wETH), Dai (DAI), Tether (USDT), and USD Coin (USDC). The breach compromised the integrity of these assets, leading to a loss of confidence and stability.
Following the Multichain hack, the protocol has suspended all its services indefinitely, without providing a specific timeline for their resumption. This move has left users and market participants uncertain about the future of their assets and the overall security of the crypto market. In response to the breach, leading stablecoin issuers Circle and Tether took swift action by freezing the funds associated with the Multichain hack. Blockchain security firm PeckShield reported that five addresses linked to the hack were frozen, with three accounts holding 63 million USDC and two accounts holding 2.5 million USDT.
The freezing of these funds is a proactive measure by Circle and Tether to mitigate further damage and protect the stability of their stablecoin offerings. By freezing the affected accounts, they aim to prevent the flow of compromised funds within the ecosystem and maintain the integrity of their stablecoin offerings. This action demonstrates the commitment of these issuers to safeguarding the interests of their users and maintaining trust in the stability of their stablecoins.
The recent depegging of stablecoins Tether (USDT) and USD Coin (USDC) on Binance US, following the Multichain hack, has exposed the vulnerabilities and risks that persist in the crypto market. These incidents serve as a stark reminder of the importance of robust security measures and constant vigilance to safeguard digital assets. Market participants, exchanges, and blockchain projects must continue to prioritize security protocols, implement stringent measures, and enhance risk mitigation strategies to counter the evolving nature of cyber threats.
While these incidents raise concerns about the stability of stablecoins, it is essential to recognize that the crypto market as a whole is evolving and maturing. Regulatory authorities are becoming increasingly vigilant and implementing frameworks to protect investors and ensure the integrity of digital assets. As stablecoin issuers work towards enhancing security measures and implementing safeguards, they can contribute to the broader efforts of creating a secure and reliable crypto ecosystem.
In conclusion, the depegging of stablecoins Tether (USDT) and USD Coin (USDC) on Binance US, following the Multichain hack, has exposed vulnerabilities in the crypto market. The freezing of compromised funds by Circle and Tether demonstrates their commitment to protecting the stability and trustworthiness of their stablecoin offerings. As the industry faces ongoing challenges, the need for enhanced security measures, stringent protocols, and proactive risk mitigation strategies becomes even more critical. By addressing these concerns, the crypto market can continue to mature and build confidence among investors and users alike.
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