Ripple’s RLUSD Stablecoin Faces Criticism Over User Base Authenticity

Prominent blockchain investigator ZachXBT has recently deleted a social media post where he criticized Ripple’s RLUSD stablecoin. In the now-deleted post, ZachXBT argued that RLUSD lacked an authentic user base and relied on paid partnerships to create the illusion of organic growth. He expressed more trust in other established stablecoin issuers like Circle, Paxos, or Tether.

An XRP supporter responded to ZachXBT’s critique, asserting that RLUSD is actively used within Ripple’s payment network, which is integrated with millions of merchants via AEON and AlchemyPay. The supporter noted that while Ripple, like other major projects, pays for partnerships to drive growth, this strategy should not be mistaken for non-organic adoption. The supporter added that this is a common practice in the industry and is essential for scaling.

Launched in December 2024, RLUSD is a US dollar-pegged digital asset issued under a New York trust license. It is backed by cash reserves and short-term US Treasurys, offering a regulatory-compliant option designed for global transactions. Since its launch, RLUSD has shown impressive growth, reaching a market capitalization of over $455 million.

ZachXBT’s criticism also extended to Circle’s USDC, the second-largest stablecoin by market capitalization. He alleged that North Korean IT operatives use the token to move illicit funds and criticized Circle for failing to detect and freeze suspicious activity, despite its claims of having strict compliance protocols. ZachXBT pointed out that his investigations resulted in $3.6 million, or 27% of Circle’s total amount frozen in 2024. This is not the first time ZachXBT has criticized the USDC stablecoin issuer. Last year, he claimed Circle delayed blacklisting addresses tied to the Lazarus Group, a North Korea-linked hacking organization involved in several high-profile crypto heists. ZachXBT alleged that this delay allowed Circle to profit from transactions linked to the group.

ZachXBT’s actions and statements have sparked a debate within the crypto community about the trustworthiness and compliance of major stablecoin issuers. While some users support his investigations and criticisms, others argue that his methods and conclusions are flawed. The incident highlights the ongoing challenges and controversies surrounding stablecoins and their role in the broader cryptocurrency ecosystem.