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.
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.
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.
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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