The anchored euro (AEUR) stablecoin, which is supposedly pegged to 1 euro, surged over 200% on Dec. 5 after being listed on the crypto exchange yesterday.
Throughout most of the day, the AEUR-USDT trading pair hovered around $1.08, aligning closely with the prevailing EUR-USD exchange rate, as per Binance’s trading data.
However, at approximately 17:45 UTC, the token’s value began to climb rapidly, accompanied by high trading volumes, reaching a peak of $3.25.
Binance responded to this unexpected volatility by halting trading of the token, as announced in a later X post.
AEUR is issued by Anchored Coins, a Switzerland-based subsidiary wholly owned by Singaporean investor and ex-parliamentarian Calvin Cheng, as stated in an earlier press release this year. Also, per the project’s website, the token’s value is backed by euro fiat assets and boasts a market capitalization of $5 million.
The cause behind this abrupt price increase remains unclear. However, the token’s relatively low market cap and limited liquidity could render it susceptible to de-pegging and potential price manipulation.
This incident highlights the inherent risks associated with stablecoins, which are not immune to periods of price instability on exchanges.
According to a report by Moody’s Analytics, large-cap fiat-backed stablecoins have experienced de-pegging incidents 609 times until mid-September 2023, influenced by various macroeconomic and coin-specific factors.