Binance, one of the world’s largest cryptocurrency exchanges, has suspended trading of the AEUR stablecoin, which is pegged to the euro, after it experienced a sudden surge of over 200% on Sunday, December 5. The exchange cited “abnormal volatility” as the reason for the suspension and said it would compensate affected users.
#Binance has suspended trading of $AEUR due to abnormal volatility.
Thanks for your patience and our team is working towards reopening trading soon.https://t.co/F80OVDG1qk
— Binance (@binance) December 5, 2023
AEUR, which is issued by Anchored Coins, a Switzerland-based subsidiary of Singaporean investor Calvin Cheng, was listed on Binance on December 4. The stablecoin is supposed to be backed by euro fiat assets and maintain a 1:1 peg with the euro. However, on December 5, the token’s value skyrocketed from around $1.08 to $3.25 at 17:45 UTC, before dropping back to $1.12 at 18:00 UTC.
Binance Took Quick Actions in Response to the Abnormal Activity
Binance announced the suspension of AEUR spot trading at 18:05 UTC and said it would conduct a “thorough investigation” into the incident. In response to the irregular price activity of the stablecoin, Binance decided to halt spot trading for several AEUR trading pairs. The pairs affected by this suspension included AEUR/USDT, BTC/AEUR, ETH/AEUR, and EUR/AEUR. Binance advised users to cancel any open orders involving AEUR and withdraw their funds as soon as possible.
The exchange has established a reimbursement scheme for individuals who acquired the stablecoin at a price higher than its designated value. Those traders who procured AEUR between 12:41 p.m. and 1:31 p.m. EST on Tuesday and retained them without selling on Binance will qualify for this compensation. The initiation of this reimbursement process is anticipated to occur in the forthcoming three days.
The cause of the AEUR price spike is still unclear, but some speculate that it could be due to low liquidity, market manipulation, or technical issues. The incident raises questions about the stability and security of stablecoins, especially those with lower market caps and limited adoption. AEUR has a market capitalization of around $5 million and is only traded on a few platforms, such as Binance and Bitfinex.
