Justin Sun has recently stepped in to provide financial support to the TrueUSD stablecoin, managed by Techteryx, after it faced a dire liquidity crisis. Nearly half a billion dollars of TrueUSD’s reserves became illiquid, leading to a significant conflict involving mismanagement allegations. According to sources familiar with the situation, this intervention was crucial as court documents filed in Hong Kong indicate serious financial distress for the stablecoin.
Techteryx acquired TrueUSD from TrueCoin in December 2020 and appointed First Digital Trust (FDT) to oversee its reserve management. However, documents prepared by the U.S. law firm Cahill Gordon & Reindel revealed that significant portions of the reserves, amounting to approximately $456 million, were allegedly misappropriated to a different entity—Aria Commodities DMCC—instead of being invested appropriately in the intended Aria Commodity Finance Fund.
Matthew Brittain is identified in court filings as the individual in charge of Aria CFF, with his wife Cecilia Brittain being the sole shareholder of the Dubai-based Aria Commodities DMCC. Evidence shows a tight relationship between these entities, further raising concerns about their financial dealings and transparency.
According to allegations, substantial funds directed towards Aria DMCC were accompanied by undisclosed commissions and mischaracterized as legitimate investments, constituting fraudulent behavior. Court claims underscore that these remittances were unauthorized, positioning them as acts of misappropriation and potential money laundering.
When Techteryx sought to redeem its investments from Aria CFF, it encountered significant difficulties, with defaults on payments leading to a failed redemption process. This environment forced Techteryx to gain full operational control of TrueUSD and terminate TrueCoin’s involvement in July 2023.
Justin Sun’s intervention occurred amid a liquidity crisis, with a structured loan intended to stabilize the situation. To prevent potential fallout for retail token holders, Techteryx quarantined $400 million TUSD, ensuring continued redeemability despite the lack of reserves.
First Digital Trust Responds
In light of these developments, Vincent Chok, CEO of First Digital Trust, denied all allegations of wrongdoing. He emphasized that FDT acted solely as a fiduciary intermediary, executing transactions based on instructions from Techteryx, and stated that the company had not independently evaluated the investments involved.
Aria Group has also refuted Techteryx’s claims. Matthew Brittain contended that issues concerning beneficial ownership and investment strategy were well communicated and agreed upon before any transactions took place.
Challenges Along the Way
In addition to these internal struggles, TrueUSD faced external pressures due to banking partners and mounting regulatory scrutiny in the U.S. Prime Trust, a custodian for TrueUSD’s fiat transactions, went into receivership amid allegations of mismanaging customer funds.
TrueCoin and TrustToken recently reached a settlement with the SEC over misrepresenting the stability of TrueUSD, agreeing to pay civil penalties without admitting any wrongdoing. Meanwhile, Brittain commented on the inappropriateness of the investment strategy chosen for stablecoin reserves, highlighting inherent risks.
This unfolding story showcases not only the complexities surrounding cryptocurrency management but also the heightened scrutiny faced by digital assets, emphasizing the need for transparency and due diligence in this rapidly evolving financial landscape.
