- USD1 fell to $0.994 on Monday before recovering to $0.9994 and returning to its $1 peg.
- World Liberty Financial said the dip followed unauthorized access to the co-founders’ X accounts.
- USD1 holds a $5 billion market cap, with nearly $4.5 billion sitting on Binance.
USD1, the dollar-pegged stablecoin issued by World Liberty Financial (WLFI), briefly fell below its $1 benchmark on Monday after what the company described as a coordinated attack.
The token dropped to $0.994, according to CoinGecko data, before recovering to $0.9994 and later trading back at par. It said no smart contracts or wallets were breached and that reserves remain fully intact.
WLFI said hackers gained unauthorized access to several co-founders’ X accounts. The firm described the incident as a coordinated attack focused on social media, not on blockchain infrastructure.
The company claimed attackers paid influencers to spread fear, uncertainty, and doubt, while also opening large short positions in WLFI-related assets to profit from market panic. However, no evidence was provided to support the claim.
The firm stated that zero smart contracts were affected and that the mint-and-redeem system functioned as designed.
“Thanks to USD1’s sound mint-and-redeem mechanism and full 1:1 backing, we are trading steadily at par,” the company said, adding that infrastructure and security systems operated normally during the event.
Peg Pressure and Market Crash
Stablecoins are designed to trade at $1. While small deviations are common, sharp drops, even below 1%, draw attention in stressed markets.
USD1 has a market capitalization of about $5 billion, making it the fifth-largest stablecoin. By comparison, Tether stands at roughly $185 billion and Circle at around $73 billion. Data from Arkham shows nearly $4.5 billion of USD1 is held on Binance.
On the other hand, the broader market has also turned bearish with Bitcoin falling roughly 4% on Monday to $63,000, down almost 50% from its early October peak.
Reserves, Revenue, and Political Ties
USD1 is redeemable 1:1 for US dollars, and reserves consist of short-term US Treasuries and cash equivalents and are held or maintained by BitGo Trust Co., which also issues and redeems the token.
As per an FT report, monthly reserve reports are compiled by BitGo and reviewed by Crowe LLP under standards set by the American Institute of Certified Public Accountants.
At a $5 billion size and a 3% Treasury yield, the reserve structure implies roughly $150 million in annual income from interest.
USD1 gained visibility in May 2025 when Abu Dhabi investment vehicle MGX used the token to close a $2 billion investment in Binance.
World Liberty Financial was co-founded in 2024 by President Donald Trump, his sons Donald Trump Jr. and Eric Trump, and partners including Alex and Zach Witkoff. President Trump is listed as co-founder emeritus.
Related: World Liberty Financial Price Prediction: WLFI Consolidates After January Spike in Open Interest
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Source: https://coinedition.com/trump-backed-stablecoin-usd1-briefly-loses-peg-amid-social-media-breach/
