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Neutrl pauses NUSD redemptions over undisclosed reserve issue
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- DeepHorus
Neutrl has suspended minting and redemptions for its NUSD synthetic dollar after unspecified circumstances affected protocol reserves. The Thursday announcement said other protocol functions also paused on legal advice while the impact is assessed. Neutrl did not identify the affected asset or counterparty, or say whether reserves suffered a realized loss. It also provided no timeline for resuming operations.
NUSD is designed to track the US dollar using yield-bearing crypto assets and market-neutral strategies, not bank deposits. Structured-yield protocol Strata later paused minting, redemptions, and related functions for contracts in its Neutrl market supporting NUSD-linked products. Strata said its other markets remained operational.
According to RWA.xyz, NUSD had a market capitalization of about $53.6 million on Friday, down 18.4% over 30 days. Monthly transfer volume fell 72.4% to $71.4 million. The token traded near $0.9984, with 615 holders and 347 active addresses. The earlier contraction may not be linked to the reserve issue.
The suspension prevents approved counterparties from exchanging NUSD for its backing assets while reserves are evaluated. About $53.6 million in circulation is now affected, creating uncertainty. The lack of disclosure about the scale of impairment amplifies concern. The incident highlights risks in synthetic dollar designs that rely on counterparties.
Verification platform Accountable said on May 25 that its Neutrl dashboard gave continuous cryptographic proof that reserves matched liabilities. Yet a February assessment by BA Labs classified a proposed Neutrl integration as higher risk due to counterparty, operational, and liquidity exposure. BA Labs said direct redemptions were limited to KYC or KYB-approved counterparties, and large requests could be queued.
BA Labs estimated NUSD supply at $226 million and reserves at $233.7 million then, implying 103.6% collateralization, with 87% of reserves held through Fireblocks. Neutrl said it would provide timing and next steps when available, but no deadline is set. Cointelegraph contacted Neutrl without response by publication. The event is likely to increase scrutiny of synthetic dollar transparency and reserve risk management.
