Leading South Korean crypto exchange Upbit has officially suspended deposits for Synthetix Network Token (SNX) following a trade warning issued by the Digital Asset Exchange Association (DAXA). The move, effective from April 24 at 15:00 KST, comes as SNX faces scrutiny over the instability of its associated stablecoin, sUSD.
SNX Labeled a “Trading Caution Item”
In a public notice, Upbit revealed that SNX was designated as a “trading caution item” by DAXA, triggering internal review procedures. As part of this cautionary phase, Upbit has decided to halt new deposits for SNX while it evaluates the asset’s risk profile.
Upbit explained that during the review of flagged assets, it assesses whether trading support should be continued.
“If the reasons for the designation are not fully resolved, a decision may be made to terminate trading support,” the exchange noted.
Core Issue: sUSD Fails to Maintain 1:1 Peg
The primary reason cited for the deposit suspension is Synthetix’s failure to maintain the 1:1 USD peg of its stablecoin, sUSD. Although SNX and sUSD are separate assets, SNX serves as collateral for sUSD issuance, creating interconnected risk. Currently, sUSD is trading at around $0.86, having surged 9.4% recently but still falling short of the $1 peg.
The volatility of sUSD has become a growing concern in the DeFi community, especially as stablecoins are expected to remain consistently pegged to their fiat counterparts. Over the past month, sUSD has experienced a 12.7% spike followed by a 10.6% drop, reflecting ongoing instability.
Market Reaction
Shortly after the announcement, SNX price dipped nearly 5%, trading at $0.69 with a market cap of approximately $235 million. Investors reacted cautiously, awaiting further updates from both Upbit and the Synthetix protocol.
Community Push to Restore Stability
In response to the growing concern, Synthetix founder Kain Warwick issued a call to action on April 21, urging SNX holders to participate in a new initiative dubbed the “420 Pool.” This mechanism allows users to lock up sUSD for one year in exchange for SNX rewards, in an effort to reduce sUSD supply and help restore its peg.
Future Outlook
The current suspension of SNX deposits will remain in effect until the fifth week of May 2025, after which a fresh review will determine the token’s fate on Upbit. The situation serves as a reminder of the importance of stablecoin reliability, particularly when they form the backbone of DeFi protocols.
Upbit’s decision to suspend SNX deposits amid sUSD instability reflects a broader regulatory shift toward protecting investors from volatile or structurally flawed crypto assets. As South Korea’s regulators and exchanges adopt a more proactive stance, the DeFi industry faces increasing pressure to uphold transparency and resilience especially when stablecoins are involved.
