World Liberty's USD1 Loses $400M in Two Weeks as Redemptions Hit

World Liberty Financial's USD1 stablecoin shed more than $400 million in market capitalization over two weeks of concentrated redemptions on Ethereum and BNB Chain.

CoinGecko data showed USD1's market cap at roughly $4.02 billion on Monday, down from $4.43 billion on Oct. 6 — a decline of about $401 million, or 9.1%. The project's own proof-of-reserves dashboard separately reported approximately $4.01 billion in reserves backing the token.

The contraction marks one of the sharpest supply drawdowns among major dollar-pegged tokens this month, and it lands at an awkward moment: World Liberty Financial is preparing to move issuance to its own trust company, a transition whose legal footing is still being contested in court.

Who is redeeming, and how much?

Blockchain research firm Onchain Benchmark traced nearly $200 million of the BNB Chain redemptions to a single unidentified address. The researchers couldn't establish who controls the funds or why the tokens were redeemed. Those transfers moved in batches of $30 million to $50 million, according to the firm's report.

The numbers break down by chain:

• Ethereum: $184.60 million in net redemptions across 63 token burns between Oct. 6 and Oct. 15
• BNB Chain: $200.43 million across 12 burns
• Solana: no new issuance to offset; supply flat at about $1.42 billion over the nine days reviewed
• Cross-chain transfers: under $1 million between Ethereum and BNB Chain, suggesting supply wasn't simply relocated

On Ethereum, more than 99% of tokens sent for redemption passed through a wallet labeled BitGo, USD1's current issuer and custodian. That concentration matters operationally: redemptions are flowing through a single institutional gatekeeper, and the pending issuer change will move that function in-house.

Did USD1 hold its peg?

Yes. Onchain Benchmark found USD1 traded between $0.998 and $1.000 throughout the period, with no evidence of a sustained depeg. In other words, holders redeemed at par and the token's dollar value held — the supply simply shrank.

That's the stablecoin equivalent of a quiet bank run that never becomes a run: large holders exit through the front door, redemptions settle, and the peg survives. But the composition of the remaining float matters more than the peg itself.

"The next tests come with the change of issuer," Onchain Benchmark said. "When World Liberty's trust company opens, it will take on a token whose size depends on the decisions of a few large holders, under a charter whose legal footing is being argued in court."

The firm added: "Whether fresh mints on Solana, or anywhere else, rebuild the total, or October marks the size USD1 carries into its new issuer, is the question the next weeks of supply data will answer."

How does USD1 compare to other stablecoins?

USD1's contraction outpaced its peers on Ethereum between Oct. 6 and Oct. 15:

• USD1: supply fell 11.45%
• USDe (Ethena): down 4.93%
• USDC (Circle): down 2.18%
• USDT (Tether): circulating supply down 0.76%

A double-digit supply decline in nine days is unusual for a top-ten stablecoin. For issuers, circulating supply is the core business metric — it drives reserve income and determines the token's weight in payments, trading and treasury flows. A 9.1% market-cap drop concentrated among a handful of large holders raises concentration risk at precisely the point World Liberty Financial plans to take issuance in-house.

The issuer transition also carries regulatory weight. A trust company charter would put World Liberty Financial in the same category as regulated stablecoin issuers, but the charter's legal standing is disputed in ongoing litigation — meaning the token could change hands under terms a court may yet revisit.

The next checkpoint is the supply data itself: if fresh mints on Solana or elsewhere restart, USD1 enters its new issuer near its current $4 billion scale. If redemptions continue, October's $4.43 billion figure may turn out to be the high-water mark.