Neutrl has reopened redemptions for NUSD and sNUSD after a five-week freeze, but the portal is offering holders 0.51 USDC per token rather than a $1 payout.
On Sept. 17, the decentralized yield protocol said holders could redeem NUSD and sNUSD for USDC at a fixed rate, with redeemed tokens burned after conversion. The window is expected to stay open until Nov. 14. On-chain contract data shows Neutrl’s redemption contract returning a redemptionRate value of 510000000000000000, which converts to 0.51 using 18 decimals. That means each NUSD can be redeemed for 0.51 USDC.
A half-price exit after five weeks
Neutrl’s only publicly named founder and chief executive is South African entrepreneur Behrin Naidoo. He studied at the University of Cape Town and London Business School, and previously worked at PwC, JPMorgan’s South Africa financial equities research unit, and RMB/RMI. He also took part in building liquidity management protocol Fyde Treasury.
The protocol’s operating entity is Caverna Auctus Inc., registered in Panama. In April 2025, Neutrl raised about $5 million in seed funding. The round was led by UK-based locked-asset OTC platform STIX and Boston venture fund Accomplice. Other backers included Amber Group, Nascent, Figment Capital, and SCB Limited, which sits under Susquehanna, along with angel support from Ethena founder Guy Young and Arbelos co-founder Joshua Lim.
STIX sits at the center of Neutrl’s business structure. The firm focuses on OTC trading in illiquid and locked tokens. Its founder, Taranveer Sabharwal, also served as an early adviser to Fyde Treasury, linking him to Naidoo before Neutrl launched.
Under Neutrl’s model, users deposit USDC, USDT, or USDe to mint NUSD, then stake it into sNUSD for floating yield. The protocol uses channels such as STIX to buy discounted OTC positions with lockups, while hedging token price moves in derivatives markets through perpetual short positions.
That setup tied the protocol closely to a specific OTC distribution network from the start. Its terms also stated that once minting occurred, ownership of the deposited assets belonged to the company, and the token represented a yield claim rather than a direct property claim on principal.
Price hedges do not solve liquidity mismatch
Neutrl’s structure did not remove the core redemption risk. Perpetual shorts can offset market-price swings, but they do not fix a situation where locked OTC assets cannot be sold quickly or where counterparties fail to deliver.
On the liability side, the protocol offered what was effectively an instantly liquid claim accounted for at $1. On the asset side, it held locked and illiquid positions. That maturity mismatch was built into the design. Neutrl previously said on X that assets under management peaked at about $230 million during Season 1.
In early 2026, BA Labs, acting as risk adviser for Summer.fi’s high-risk vaults, labeled Neutrl as Higher Risk in an assessment on whether sNUSD should be admitted to a vault. The review said counterparty and operational risks were elevated. The article also noted that the forum proposal was only a third-party risk opinion, and that Summer.fi’s security incident in July was a separate code attack unrelated to Neutrl’s redemption capacity or strategy design.
That assessment was later cited in governance forum discussions around a proposal to admit sNUSD into a Summer.fi vault. A later February assessment recorded supply at about $226 million and reserves at about $233.7 million, with more than 87% held in custody through Fireblocks. The main concerns were liquidity and counterparty exposure. Direct redemptions were also limited to KYC/KYB institutional users, while excess withdrawals faced a non-binding 48-hour queue.
Minting halt, drained liquidity, and limited disclosure
On Aug. 13, Neutrl abruptly suspended minting and redemptions. Its notice said only that reserves had been affected. Follow-up statements said there had been no hack and no code vulnerability, but did not say whether the problem came from positions, counterparties, or liquidity.
That same day, about $3.51 million in liquidity was removed from the NUSD/USDC pool on Curve, and the pool was later blacklisted. Neutrl also shut off replies on X and switched its community channels to read-only mode. At that point, NUSD’s external circulating market value had already fallen to about $53.5 million.
On Aug. 28, Neutrl published its first verification data, saying it had about $27 million in immediately available liquid assets. The rest of the assets were described as "currently not liquidatable," with no certainty on recovery timing or amount.
Measured against the roughly $53.5 million circulating value at the time redemptions were halted, that $27 million cash figure is close to half. It sits in the same range as the 0.51 redemption ratio announced on Sept. 17. Based on the figures disclosed in the article, the payout looks closer to a direct allocation of known cash across outstanding tokens than to a final liquidation result based on full look-through valuation.
As for the remaining value of the still-unrealized positions, neither Neutrl, STIX, nor any other third party had commented at the time of publication.
Staked and unstaked holders face the same rate
For token holders, the mechanism puts staked and unstaked balances on the same line. sNUSD must first be unstaked into NUSD, then redeemed at the same fixed 0.51 rate into USDC.
The discounted payout has also triggered questions from the community about the legal nature of the redemption flow. Neutrl describes the process as standard "terms and conditions" and says holders must connect a wallet and sign an on-chain message to "verify wallet ownership." Without that signature, redemption is not available.
The article says there is currently no definitive judicial ruling on whether that signature could amount to a waiver of claims over any remaining assets.
Losses spread into Strata’s structured product
The impact also reached downstream markets. Structured yield protocol Strata had previously created a market of about $1.7 million around Neutrl, splitting sNUSD into senior tranche srNUSD and junior first-loss tranche jrNUSD.
On Sept. 17, Strata detected the 0.51 redemption rate from the Neutrl contract and said it was the only observable spot reference for immediate conversion. Because the loss fully wiped out the junior protection layer, Strata marked jrNUSD net asset value to zero under its rules. It then allocated the strategy’s roughly 1.5698 million sNUSD to about 1.3472 million srNUSD to absorb the loss.
Senior holders can withdraw after a 48-hour timelock expires, but what returns to their wallets is still sNUSD. Anyone seeking liquidity must still go through Neutrl’s portal and accept the 0.51 discounted redemption.
Which asset failed remains unclear
From Neutrl itself to protocols built on top of it, the biggest unresolved issue is disclosure.
Historical dashboard data pulled by on-chain research firm D2 Finance showed that on June 7, 2026, Neutrl reported about $137 million in asset-side reserves. Of that amount, only about $12.52 million was explicitly labeled as discounted locked OTC positions. Most of the rest sat in three large positions with undisclosed underlying assets and counterparties, worth about $41.96 million, $35.77 million, and $21.19 million respectively.
Under Neutrl’s accounting logic, discounted spot holdings were booked conservatively for liquidity, while perpetual shorts and liquidity buffers made up a large share of the balance sheet. But because the protocol did not disclose the specific assets or counterparties, outside observers cannot tell which position suffered impairment.
By late August, the protocol acknowledged that immediately liquid cash had fallen to about $27 million, with most of the remainder categorized as "currently not liquidatable." Which OTC position ran into trouble, how much the asset-side reserves were written down through redemptions and losses, and what the actual impairment magnitude was all remain unanswered. Neutrl has not published a public reconciliation statement addressing those questions.
For synthetic dollar products that lack continuous independent verification of reserves, balance-sheet collateral and full redeemability are not the same thing. Neutrl has also made no commitment on whether any second distribution will follow the current 0.51 payout.
