This Stablecoin Surges 159% in 24 Hours, and Binance Halts Its Trading. What’s Happening?

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Binance, one of the leading cryptocurrency exchange platforms, made a sudden and unexpected decision to suspend trading of the stablecoin AEUR, pegged to the euro, after experiencing a significant 159% increase in its value in a single day.

This sudden surge, recorded on December 5, raised significant concerns on the platform, prompting Binance to take swift action to address what they termed as “abnormal volatility.” AEUR, which maintains a 1:1 peg with the euro, started trading around $1.08, reflecting the EUR-USD exchange rate. However, surprisingly, its value skyrocketed to $3.25 at 17:45 UTC, leading to the immediate suspension of trading.

The stablecoin AEUR is issued by Anchored Coins, a subsidiary based in Switzerland and owned by Singaporean investor Calvin Cheng. The stablecoin, claiming to be backed by fiat assets in euros, has a market capitalization of approximately $5 million.

Binance Reacts Swiftly and Protects Its Users

This incident once again brought to light the risks associated with stablecoins, especially those with lower market capitalization and liquidity. Binance’s decision to suspend trading of AEUR demonstrates the need to promptly address volatility scenarios in such digital assets to protect investors and maintain market integrity.

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The nature of this unexpected episode on Binance also highlights the need for a deeper understanding of the market. While these coins are designed to maintain their value pegged to a fiat currency, events like the sudden surge in AEUR show that there are inherent risks. It is not yet clear whether it was a security breach and subsequent manipulation, and clear motives regarding the incident are unknown.

For now, Binance continues to keep AEUR trading suspended, meaning users cannot trade with the stablecoin. However, the platform emphasized that both deposits and withdrawals can still be used uninterrupted, as is customary on the exchange. Users are urged to await the next announcement where the full resumption of operations for spot trading pairs will be announced.


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