USD1 stablecoin loses $401 million: almost $200 million traces back to a single address

The stablecoin USD1 has shrunk by roughly $401 million in two weeks. Its market capitalisation fell from about $4.43 billion on October 6 to around $4.02 billion, a drop of 9.1 percent. The dollar price held steady throughout: the token traded consistently between $0.998 and $1.000. What shrank, then, was not the price but the number of tokens in circulation.

Who triggered that decline is the striking part. According to an analysis by the blockchain research outfit Onchain Benchmark, just under $200 million of the redemptions trace back to a single address whose owner is unknown. For holders in Germany, a practical question hangs on this: what rights do you have against the issuer when a stablecoin shrinks quickly?

What happened to USD1 between October 6 and October 19

USD1 is a dollar-pegged stablecoin issued by World Liberty Financial. A stablecoin of this design holds its price through deposited reserves rather than an algorithm: for every token issued, a dollar or a dollar-like asset is meant to sit with the issuer.

Between October 6 and October 19, 2026, market capitalisation fell by about $401 million according to CoinGecko data. World Liberty Financial's proof-of-reserves dashboard showed roughly $4.01 billion in reserves over the same period, a figure close to the reported market capitalisation. CoinGecko data put USD1 at $0.9990 on October 19, 2026, with a market capitalisation of $4.01 billion and daily turnover of around $958 million.

For a sense of scale: Tether (USDT) stood at roughly $183.5 billion the same day, USDC at about $72.3 billion. At four billion dollars, USD1 is a mid-sized stablecoin, where a single withdrawal of several hundred million dollars lands hard in percentage terms.

$184.60 million on Ethereum: 63 burns through the BitGo wallet

When a stablecoin is redeemed, the returned tokens are destroyed. That process is called a burn: the issuer takes the tokens out of circulation and pays out from the reserve in exchange. Every burn is visible on the blockchain, and that is precisely how a decline can be recalculated.

On Ethereum, Onchain Benchmark counted net redemptions of $184.60 million between October 6 and October 15, spread across 63 burns. USD1 circulation on Ethereum fell 11.45 percent over those nine days. More than 99 percent of the tokens submitted for redemption ran through a wallet labelled as BitGo, according to that analysis. BitGo is currently the issuer and custodian of USD1.

63 burns over nine days works out at an average of around $3 million per transaction. The picture on Ethereum is therefore one of a broader return by many participants, not of a single exit.

$200.43 million on BNB Chain: a single address behind nearly all of it

On BNB Chain the distribution looks entirely different. There, Onchain Benchmark recorded $200.43 million in redemptions over the same period, but only 12 burns. Just under $200 million of that came from a single address, which returned tokens in tranches of $30 million to $50 million.

Who controls that address, and why the tokens were returned, the research outfit says it could not establish. That is an important caveat: a large return could be a market maker reshuffling holdings, an exchange holding client money differently, or a fund getting out. Blockchain data alone cannot separate those cases.

Why circulation was not merely shifted between blockchains

With a token that exists on several blockchains, the first cross-check is always the same: has the balance really disappeared, or has it just moved? USD1 runs on Ethereum, BNB Chain and Solana, among others.

Onchain Benchmark puts cross-blockchain transfers between Ethereum and BNB Chain at less than $1 million over this period. On Solana, the USD1 balance stayed at around $1.42 billion across the nine days examined, so nothing new was issued there to offset the redemptions either. The decline is therefore a genuine reduction in circulation, not a relocation.

The dollar price held: $0.998 to $1.000 over nine days

The real stress test for a stablecoin is its price, not its size. When a token meant to be a dollar falls persistently below a dollar, that is called a depeg, and at that point a means of payment turns into a risk asset.

That did not happen here. Onchain Benchmark found no sustained depegging over the period studied; the price moved between $0.998 and $1.000. That a return of several hundred million dollars was processed with no visible price effect suggests the reserves were available at that scale.

USDC, USDT and USDe over the same period: the comparison on Ethereum

An 11.45 percent decline on Ethereum says little on its own. It only becomes interesting next to the other large dollar tokens over the same window. For October 6 to 15 on Ethereum, Onchain Benchmark reports the following changes: USDe lost 4.93 percent, USDC 2.18 percent, circulating USDT 0.76 percent.

October was therefore a month of outflows for several dollar tokens, but USD1 sat well clear of the field. Part of that is the arithmetic of the smaller number: for a token worth four billion dollars, a $200 million withdrawal weighs more than it does for one worth $183 billion.

Burn, redemption, proof of reserves: the terms in brief

Redemption means a holder submits tokens to the issuer and receives money for them. Burn is the technical part of that: destroying the submitted tokens on the blockchain. Proof of reserves is a disclosure by the issuer of which assets it holds as backing.

A proof-of-reserves dashboard is not, however, an audit by an independent accountant. It shows what the issuer reports as backing, and it says nothing about what liabilities sit alongside it or how quickly those assets would turn into cash. Anyone wanting to judge how robust a stablecoin is therefore reads both side by side: the reported backing and the conditions under which the issuer actually pays out.

MiCA and the redemption right under Article 49: what applies to USD1 in Germany

For holders in Germany it is the European MiCA regulation that decides, not US law. It treats stablecoins pegged to a single currency as e-money tokens. Article 49 of MiCA obliges the issuer of such a token to redeem it at any time, at par and free of charge. Article 50 also prohibits paying interest on e-money tokens.

That claim depends on authorisation. As the ESMA register stood on September 30, 2026, USDC and EURC are authorised as e-money tokens, issued by Circle Internet Financial Europe and supervised by France's ACPR. For USDT and USD1 there is no register entry. Which stablecoins are listed with which MiCA status is tracked continuously in our overview of stablecoins with MiCA status.

In practice that means: if you hold USD1, your redemption follows the issuer's terms and not the European claim to par value. What obligations authorisation brings with it, and how to recognise an authorised provider, is covered in our overview of MiCA licensing duties for crypto companies.

Concentration risk: when a few large holders carry the size

The finding on BNB Chain describes a pattern that appears more often with young stablecoins: a substantial share of circulation sits with a few addresses. Twelve burns for $200 million means a handful of large participants exited here, not a mass of retail holders.

For small holders no immediate loss follows from that, as long as price and reserves hold. A dependency does follow, though. When a large holder withdraws, the token's liquidity on trading venues falls, trading pairs thin out, and spreads can widen. Anyone using a stablecoin as a parking position between two purchases notices that first when selling.

The switch of issuer to the trust company: the next test

Onchain Benchmark points to a step ahead: "The next tests come with the change of issuer." World Liberty Financial has announced that a trust company of its own is to take over the issuance of USD1. The research outfit reads that as meaning this company would take on a token whose size depends on a few large holders, and do so under a charter whose legal basis is being litigated. The report gives no date for the opening.

A change of issuer is no marginal formality for holders. With it come a different counterparty, a different custodian and a different supervisor, and therefore a different address against which a redemption claim is directed at all. The background on the trust company and the open questions is set out in our piece on the World Liberty Financial US Trust Bank.

What is established and what remains open

Established is the order of magnitude: roughly $401 million less in circulation, $184.60 million of redemptions on Ethereum, $200.43 million on BNB Chain, a stable price between $0.998 and $1.000, reported reserves of around $4.01 billion.

Open is the cause. Neither who controls the large address on BNB Chain nor why tokens were returned there is known. No accusation against the issuer follows from a decline in circulation alone: redemptions are the intended way to leave a stablecoin, and that they worked without breaking the price is, for now, a sign that the mechanism held. Reading more into it would require information that nobody currently has in public.

USD1 in Germany: no MiCA entry, no claim under Article 49

Three steps make sense now if you hold dollar stablecoins:

1. Check the authorisation status of your stablecoins. What matters is whether the token is listed in the register as an e-money token, because the claim to par value under Article 49 hangs on that. The status per token is in the stablecoin overview with MiCA status.
2. Check which provider you hold through. A service provider authorised in the EU is subject to rules on segregating client funds and on custody. Which houses hold an authorisation is shown in the comparison of regulated crypto exchanges.
3. Weigh holding period against risk. For brief parking between two purchases, liquidity counts; for longer holding, the legal framework counts. Anyone holding larger balances over longer periods should factor in custody away from the exchange; the differences are set out in the hardware wallet comparison.

The figures in this report come from the Onchain Benchmark analysis published on October 19, 2026, and from CoinGecko market data of the same day. They can be read in the Cointelegraph report and at Onchain Benchmark.

(As of October 19, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)