South Korea’s regulator warns of the risks of investing in WAVES
The main reason is the depegging of the USDN stablecoin, backed by the altcoin, from the dollar
08.12.2022 - 13:20
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What’s new? South Korean cryptocurrency exchange Upbit has issued a warning to its users about the risks of investing in the project WAVES. The token has reportedly been flagged by the Digital Asset eXchange Association (DAXA) of South Korea. The organization may take further measures to protect investors, including stopping support for trading in pairs to BTC and the South Korean won.
What else is known? WAVES is used as collateral for the algorithmic stablecoin Neutrino USD (USDN). According to Upbit, USDN is not properly pegged to the US dollar, so there is a risk of unexpected losses for investors due to the volatility of the rate of WAVES.
Upbit will conduct a detailed review of the asset within two weeks of the issuance of the warning to decide on its continued support. The review period may be extended. If the risks are not addressed within this timeframe, the exchange will issue an announcement to end support for the asset.
Neutrino USD is released in 2019 on the Waves blockchain with the Proof-of-Stake (PoS) consensus algorithm and is fully backed by its native cryptocurrency WAVES. Based on the Neutrino protocol, it is possible to create stablecoins tied to real assets such as national currencies or commodities. As of December 8, 13:00 UTC, WAVES is trading at $2,052, down by 12,21% in 24 hours, according to Binance. The price of the USDN stablecoin has fallen to $0,855.
Upbit issued a similar warning in June 2022. At that time, users were notified about the risks associated with WAVES and TRON (TRX) tokens. And in August, USDN lost parity against the dollar for the fourth time in four months. In April and May, the stablecoin was down to $0,82, and on June 10 it was down to $0,89. On August 26, the value of the asset dropped by 9% against fiat currency.
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