On December 5, Binance, the largest global cryptocurrency exchange network, suspended the trading of the Euro-pegged stablecoin AEUR following a price surge of over 200% yesterday.
Binance Suspends AEUR
The stablecoin was designed to maintain a peg of $1.08, aligning with the EUR-USD rate. However, at some point yesterday, the stablecoin surged to about $3.25, a 200% price surge.
This unexpected increase in the stablecoin’s value led to a paralleled surge in trading volumes. Immediately, Binance took action and halted the trading of this stablecoin.
Binance wrote in a statement;
“After AEUR went online, it attracted the attention of community users. However, some users did not realize that AEUR was a stable currency when they purchased it. Demand surged in the short term, resulting in price deviations.”
Binance has yet to explain the actual reason behind the sudden price surges. However, speculations suggest that a low market cap and limited liquidity mean the stablecoin is at risk of market manipulation.
According to reports, the last trade associated with the AEUR token was completed at around 18:31 UTC. At this time, the stablecoin was still trading at $2.89, a 167% premium from the intended value.
The AEUR Stablecoin
The AEUR token is a product of Swiss-based Anchored Coin. According to its web page, the AEUR value is backed by EURO and attained a market cap of about $5 million. Anchored Coins notes that the AEUR is 100% funded with reserves at Swiss FINMA-licensed banks.
After listing the stablecoin, Binance offered free transactions for several strong trading pairs, including AEUR/USDT, BTC/AEUR, and EUR/AEUR pairs.
Recent events underscore the volatility risk of stablecoin despite being created to be stable. Moody’s Analytics reported that large-cap stablecoins experienced about 609 incidents of de-pegging until Sep 2023.
As the Anchored EURO coin halts and is delisted in Binance, another stablecoin, FDUSD, just recently crossed the $1 billion mark after Binance launched zero-fee trading.