DeFi protocol Neutrl suspended all minting and redemptions for NUSD on Thursday, citing unspecified circumstances affecting its protocol reserves. The protocol also paused other functions pending legal review and has not yet identified the affected asset, counterparty, or whether reserves suffered a realized loss.
NUSD, designed to track the US dollar through yield-bearing crypto assets and market-neutral strategies rather than bank deposits, circulates at roughly $53.6 million. RWA.xyz data showed NUSD trading at approximately $0.9984 on Friday, down 18.4 percent over 30 days. Transfer volume fell 72.4 percent to $71.4 million in the same period.
Structured-yield protocol Strata subsequently paused minting, redemptions and related functions for contracts in its Neutrl market, which supports NUSD-linked products. Strata confirmed other markets remained operational.
A February risk assessment by BA Labs had flagged a proposed Neutrl integration as higher risk, citing counterparty, operational and liquidity concerns. The firm noted that direct NUSD redemptions were restricted to KYC/KYB-approved counterparties, with requests exceeding the liquid buffer entering a queue with a 48-hour target completion window—not guaranteed.
At the time of BA Labs' assessment, NUSD supply stood at $226 million with reported reserves of $233.7 million, implying 103.6 percent collateralization. More than 87 percent of reserves were held through Fireblocks.
On May 25, verification platform Accountable stated its Neutrl dashboard provided continuous cryptographic proof that NUSD reserves matched protocol liabilities. That assurance now appears void.
Neutrl said it will provide updates on timing and next steps once it determines the extent of reserve impairment.
