Gemini Dollar stablecoin circulating supply mysteriously plummets as Huobi balances disappear

The circulating supply of the Winklevoss twins' stablecoin Gemini Dollar is plummeting.

Following the cover-up controversy from Tether, the most dominant stablecoin currently in the market, most other stablecoins-including GUSD-experienced an influx of new deposits as users converted USDT to safer alternatives.

Beginning December, the circulating supply of Gemini Dollar started to drop consistently from its peak of over 100 million tokens.

The stablecoin was hailed as an alternative to the controversial Tether token, with Gemini advertising its regulatory compliance and direct oversight from U.S. regulators, most notably the New York State Department of Financial Services.

Gemini even called GUSD the "World's first regulated stablecoin."

Such a listing would have made GUSD the fifth stablecoin that's available for trading on the platform, after Tether's USDT, Coinbase-backed USD Coin, Paxos Standard, and TrueUSD. Yet, instead of listing GUSD, Binance decided to list StableUSD from Stably, a little-known Seattle-based startup whose stablecoin's market capitalization was one-tenth the size of GUSD. It has now been three months since Binance listed Stably's USDS. No new stablecoins have been added since and some are now speculating that Binance intentionally kept GUSD off of their exchange.

Another anomaly around Gemini Dollar is the large percentage of its circulating supply that was once controlled by wallets belonging to Huobi, a leading Asian crypto exchange.

In January, Huobi controlled 78 percent of all circulating GUSD based on blockchain data analyzed by CryptoSlate.

An anonymous source who works in the stablecoin industry has hypothesized that Gemini received a $70 million loan from Huobi to jumpstart its initial reserves and market capitalization.

Why GUSD is facing such a sudden drop in its outstanding supply is still unclear and may indicate a deeper underlying issue with the stablecoin.