Justin Sun, Founder of Tron, Steps in to Rescue TrueUSD (TUSD) from a $456M Reserve Crisis

Justin Sun, the founder of Tron, stepped in to provide crucial financial support to TrueUSD (TUSD) following a $456 million reserve crisis

A statement from Justin Sun, founder of Tron, has shed light on his role in providing crucial financial support to TrueUSD (TUSD) following a $456 million reserve crisis.

The crisis arose due to a series of financial missteps and unauthorized investments by First Digital Trust (FDT), an independent fiduciary based in Hong Kong, appointed by Techteryx to manage TUSD funds.

Instead of sinking the agreed funds into the Aria Commodity Finance Fund (Aria CFF), FDT is accused of channeling funds to Aria Commodities DMCC which is a company different from Aria CFF but based in Dubai.

Aria Commodities DMCC offered trade finance, commodity trading and infrastructure development services wherein it invested in assets which were mainly non-standard. This caused problems when entry was sought by Techteryx to ‘exchange’ the investments, as the money was not ‘redeemed’.

Court documents further reveal that even though Techteryx attempted to withdraw the cash several times, Aria CC had hardly remunerated it.

Techteryx, which acquired TrueUSD in December 2020, faced a severe liquidity crisis when it discovered that around $456 million of its stablecoin reserves had been placed into illiquid investments by FDT.

These investments were not aligned with the agreed-upon strategy, which involved sinking the funds into the Aria Commodity Finance Fund (Aria CFF) for liquidity.

Instead, FDT, led by Chief Executive Vincent Chok, had invested in a series of non-standard assets through Aria Commodities DMCC, a company based in Dubai and offering trade finance, commodity trading, and infrastructure development services.

Despite Techteryx’s attempts to intervene and exchange the investments, the value had diminished significantly from the initial capital contribution, rendering them illiquid in the short term.

To support the ongoing operations and prevent any disruption to TUSD users, Sun, a prominent figure in the cryptocurrency industry, stepped in to offer financial assistance.

His involvement came amid growing concerns about the stability of the stablecoin, with many wondering whether TUSD could withstand the financial turmoil.

Techteryx’s decision to isolate the troubled reserves helped ensure that the broader stablecoin ecosystem was not adversely affected, despite the underlying issues.

The statement from Sun, founder of Tron, sheds light on his role in providing crucial financial support to TrueUSD (TUSD) following a $456 million reserve crisis.

The statement reads, in part:

“When funding reserves in TUSD became unavailable, the stability of the stablecoin and its link to the US dollar came under threat. To mitigate the effects of the situation regarding liquidation, I injected capital into TUSD to prevent further collapse.”

“My financial intervention allowed for the continuation of retail redemptions and averted further disruption of TUSD users. The support was in the form of a loan and for this purpose, Techteryx put aside 400 million TUSD to help in supporting the confidence of the users or customers. In the statement explaining the reason behind such a decision, Sun underlined the necessity to preserve users’ confidence.

“I stepped in to help stabilize TUSD because I believe in the importance of maintaining trust in stablecoins and ensuring the security of their reserves.”

The statement from Sun highlights the difficulties faced by TUSD in recent times, amid a broader downturn in cryptocurrency markets and a series of legal challenges.

The problems arose after Techteryx acquired the stablecoin from TrustToken and encountered difficulties with FDT, which was appointed as fiduciary to manage TUSD funds.

Instead of investing in the agreed-upon Aria CFF, FDT is accused of channeling funds to Aria Commodities DMCC for investing in non-standard assets.

This caused issues when Techteryx sought to exchange the investments and recover the cash, as it was not easily "redeemed." Despite attempts by Techteryx to withdraw the cash, Aria CC had hardly remunerated it by the time the matter reached court.

The statement also mentions fraud, misrepresentation, and embezzlement, with unauthorized trade finance loans being advanced from FDT to Aria CC and later misrepresented to investors as investment projects.

However, FDT’s Chief Executive, Vincent Chok, has refuted these allegations, asserting that FDT never undertook an independent evaluation of the investments and was acting based on the directives of Techteryx.

Moreover, Matthew Brittain, a member of the Aria Group, has also denied Techteryx’s allegations, noting that all transactions were transparent and carried out as agreed.

Brittain questioned some ambiguous issues about the ownership of Techteryx, which has faced legal and financial challenges in the recent past.

The statement concludes with a summary of the key issues in the case, highlighting the financial difficulties faced by TUSD and the role of FDT in making a series of missteps that led to the liquidity crisis.