World Liberty Financial Claims USD1 Under Coordinated Attack as Price Slips Below $1

The team behind the crypto project World Liberty Financial claims that its stablecoin, USD1, is under a coordinated attack. The claims come as USD1 records a slight decline from its $1 peg.

According to a tweet addressing the situation, World Liberty Financial said the coordinated attack was launched on Monday morning. However, it did not work, thanks to the stablecoin’s mint-and-redeem mechanism.

A Failed Attack on USD1

USD1 experienced a sudden plunge in its price earlier today, slumping about 0.6% from $1 to $0.994. Although the asset had recovered at the time of writing, the recovery back to the $0.998 level has been slow.

World Liberty Financial said the attackers behind the issue hacked several of its co-founder accounts and paid influencers to spread fear, uncertainty, and doubt. In addition, the bad actors opened several short positions for the project’s native asset, WLFI, to profit from the crisis. The team called this “manufactured chaos.”

“It didn’t work. Thanks to USD1’s sound mint-and-redeem mechanism and full 1:1 backing, we are trading steadily at par. No scammer can shake the long-term commitment of the entire WLFI team and cofounders to USD1. We encourage users to rely only on verified channels for accurate information,” the team stated.

WLFI Teams Up With Binance

The WLFI team designed USD1 to reduce friction between fiat-to-crypto conversions by removing transaction fees on minting and redemption. This mint-and-redeem mechanism makes it easier for users to enter and exit the market without financial hassle. They get to deposit U.S. dollars into accounts managed by the digital assets infrastructure company, BitGo, to mint USD1. They can also redeem their stablecoins through the same rails, within two business days.

Pegged 1:1 to the U.S. dollar, USD1 is supported by several underlying reserves, including government deposits, money market funds, and short-term U.S. Treasury bills. The asset appeared stable at press time, but it remains to be seen how the story unfolds.

Meanwhile, the latest development comes a few days after the project announced a partnership with crypto exchange Binance to incentivize early adopters for providing liquidity. Users are asked to hold USD1 to partake in a 235 million WLFI pool to be distributed between February 20 and March 20. The campaign is an extended version of the program, which began late last month. Binance took snapshots on February 20.

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