- TrueUSD issuer Techteryx has filed a lawsuit in Hong Kong, alleging that $456 million of TUSD’s reserves were misappropriated into illiquid investments
- The investments were primarily in loans to resource development projects in emerging markets, rendering the funds inaccessible
- Tron founder Justin Sun provided emergency funding to stabilize TrueUSD and maintain user confidence during the liquidity crisis
Techteryx, the issuer of the stablecoin TrueUSD (TUSD), has initiated legal proceedings in Hong Kong, claiming that $456 million of its reserves were diverted into unauthorized and illiquid investments. These funds were allegedly channeled into loans for resource development projects in emerging markets, leading to significant liquidity issues. To address the crisis and uphold user trust, Tron founder Justin Sun intervened with emergency financial support, something that Coindesk claims to have had certified by insider.
TUSD Suffered Substantial Liquidity Shortfall
Techteryx acquired TrueUSD from TrueCoin LLC, a subsidiary of Archblock, Inc, in December 2020, following which it appointed First Digital Trust (FDT) as the fiduciary responsible for managing TUSD’s reserves. Court documents reveal that instead of investing the funds as agreed, FDT allegedly redirected approximately $456 million to Aria Commodities DMCC, a Dubai-based entity specializing in trade finance and infrastructure projects.
These investments were primarily in illiquid assets, including manufacturing plants, mining operations, and port infrastructure, making them difficult to redeem and causing a substantial liquidity shortfall for TUSD between 2023 and early 2024.
Techteryx Alleges Misconduct
Techteryx has accused FDT and associated parties of financial mismanagement and unauthorized investment of TUSD’s reserves, asserting that these actions constitute “massive fraud,” as the funds were allocated to highly illiquid assets without approval. Despite attempts to withdraw the investments, Techteryx reportedly received little to no returns, exacerbating the liquidity crisis.
Amid the turmoil, Justin Sun, founder of the Tron blockchain, stepped in to provide emergency funding to stabilize TUSD. Sun’s financial support was crucial in maintaining the stablecoin’s peg to the U.S. dollar and ensuring that retail redemptions could continue, with the man himself emphasizing the importance of preserving user confidence during this period.
TrueUSD maintains a market capitalization of approximately $494.46 million, with its price close to the $1 anchor value. In September 2024, TrueCoin LLC and TrustToken Inc. settled with the U.S. Securities and Exchange Commission over allegations of fraud concerning offshore trusts.
