Is a speculative frenzy gripping the cryptocurrency market again? Traders propelled a stablecoin from a Swiss company to unimagined heights this week. The world’s largest cryptocurrency exchange is now working on a compensation plan.
Cryptocurrencies are back in vogue. Bitcoin has been bouncing from one high to another this year and is currently trading at just under $43,300, along with numerous other digital assets such as Ether.
Meanwhile, two Swiss crypto specialists are in a race against investment heavyweights like Blackrock and Invesco to launch the first Bitcoin spot ETF in the U.S. Even cantonal banks in Switzerland are getting in on the act and launching crypto services for their clients.
Soaring High After Launch
After the crypto deep freeze triggered by the collapse of the FTX cryptocurrency exchange about a year ago we are now seeing a thaw in launches of cryptocurrencies. New coins are being released to great fanfare once again. Sometimes though the reception in the community for the new tokens has even been just a little too warm. In one recent case, a «Swiss» stablecoin caused quite a stir in the cryptocurrency market.
The price of the stablecoin AEUR, issued by Zug-based cryptocurrency firm Anchored Coins and pegged to the euro, leaped by around 200 percent shortly after its listing on the spot market on Tuesday. Stablecoins are cryptocurrencies that are pegged to assets such as dollars, euros, and gold.
Many traders, apparently, did not know that AEUR is a stablecoin, which contributed to the extreme price volatility.
«Misunderstanding»
In a blog post on Wednesday, Binance, the world’s largest cryptocurrency exchange, announced that it will set up a compensation plan for users who purchased the stablecoin after its value rose above $3. Users who bought AEUR between 17:41 UTC and 18:31 UTC on December 5 but were unable to sell the stablecoin are eligible for compensation, according to the announcement.
The sudden spike in the price hike was put down to a misunderstanding among some Binance traders who failed to recognize AEUR’s stablecoin characteristics. In response to the sudden surge, the stock exchange immediately halted trading in four of the asset’s trading pairs. It justified its decision on the unusual fluctuations in the stablecoin’s price.
