Justin Sun, the founder of Tron, stepped in to help TrueUSD (TUSD) when the stablecoin experienced a significant liquidity issue involving $456 million in reserves.
Hong Kong court filings mentioned that TUSD’s fiduciary made bad financial choices and made unapproved investments, which resulted in a significant cash shortage. Sun’s support helped stabilize the situation and prevent further issues for the stablecoin.
Techteryx, the parent company of TUSD, found that most of its reserves were tied up in illiquid and risky investments. First Digital Trust (FDT), the company entrusted with these funds, was to invest them in the Aria Commodity Finance Fund (Aria CFF).
Instead, it sent the money to Aria Commodities DMCC, a Dubai-based firm involved in trade finance and commodity trading. When Techteryx tried to withdraw the funds, Aria DMCC failed to return them, causing a severe liquidity shortage for TUSD.
When TUSD reserves became mired, the stablecoin’s price and users’ trust were in danger. To avoid falling apart, Justin Sun infused capital into TUSD to allow users to redeem their tokens. Techteryx also reserved 400 million TUSD for stability.
Sun explained, “I stepped in to help stabilize TUSD because I believe in maintaining trust in stablecoins and ensuring the security of their reserves.”
Court papers charge FDT with mismanagement and fraud, claiming it extended unauthorized loans to Aria DMCC and misrepresented them as legitimate investments.
FDT’s CEO, Vincent Chok, claims innocence, stating that the company acted on Techteryx’s direction. Aria Group’s Matthew Brittain also denies allegations, stating that transactions were clear and questioning the ownership issues at Techteryx.
TUSD also encountered additional difficulty after its partner, Prime Trust, collapsed amid allegations of fraud. The SEC also fined its previous owners for misrepresenting full dollar backing when they invested in risky offshore funds.
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