Sun Yuchen Bailed Out Techteryx's TrueUSD Stablecoin After Nearly $500M of Reserve Funds Became Illiquid

Sun bailed out Techteryx's TrueUSD stablecoin after nearly $500 million in reserve funds became illiquid

After nearly $500 million in reserve funds became illiquid, Sun bailed out Techteryx’s TrueUSD stablecoin, according to a Hong Kong court filing by the stablecoin issuer.

The case, which is ongoing in the Hong Kong High Court of Justice, began after Techteryx, the new owner of TrueUSD, sued First Digital Trust (FDT), a Hong Kong-based trustee appointed by the company to manage its stablecoin reserves following the acquisition of TrueUSD from TrueCoin in December 2020.

According to documents prepared by U.S. law firm Cahill Gordon & Reindel, FDT was instructed to invest its stablecoin reserves in the Cayman Islands-registered Aria Commodities Finance Fund (Aria CFF).

However, approximately $456 million was improperly diverted to an unauthorized independent entity in Dubai, Aria Commodities DMCC, to be used for purposes other than investing in Aria CFF, the plaintiffs claimed in their statement of claim.

According to a report by the U.S. firm, Matthew Brittain controls Aria Commodities Finance Fund (Aria CFF) through Aria Capital Management Ltd, while Cecilia Brittain is the sole shareholder of Aria Commodities DMCC, an independently operated entity based in Dubai.

The report says that Brittain from Aria's email signature uses an address in Dubai.

According to the filing, Cecilia is Matthew's wife.

ARIA DMCC is engaged in trade finance, asset development and commodity trading, while ARIA CFF provides financing services to commodity traders including ARIA DMCC and other third parties, according to Matthew Brittain in an email to CoinDesk.

An audit report issued by Moore CPA Limited shows that as of November 2024, FDT manages $501 million in TrueUSD reserves.

According to the filing, First Digital CEO Vincent Chok is accused of funneling approximately $15.5 million in undisclosed commissions to an entity called “Glass Door” and of structuring an unauthorized trade finance loan of approximately $15 million from FDT to Aria DMCC that was then retroactively misclassified as a legitimate fund investment. The plaintiffs allege these actions constituted fraudulent misrepresentation and misappropriation of funds.

“The funds wired to Aria DMCC were a blatant act of misappropriation and money laundering,” the complaint reads. “These operations were conducted without the Plaintiff’s knowledge, authorization, or approval.”

As of press time, these statements have not yet been heard in court.

Aria DMCC invests funds in a variety of projects around the world, which it describes as relatively illiquid assets, such as manufacturing plants, mining operations, maritime vessels, port infrastructure and renewable energy projects.

According to the filing, Techteryx barely recovered its money when it tried to redeem its investment from Aria CFF between mid-2022 and early 2023, and Aria-related entities are accused of failing to make payments on time and not honoring redemption requests.

Subsequently, Techteryx took over the full operation of TUSD in July 2023, terminating TrueCoin's involvement. As a transitional arrangement after the sale in December 2020, TrueCoin continued to be responsible for the daily operations of TUSD.

According to the filing, Justin Sun stepped in during this period to provide emergency liquidity support for TUSD, which was structured as a loan.

The court document also stated that even though the stablecoin issuer had no funds available, the Techteryx team still isolated 400 million TUSD to ensure that retail users could still redeem them normally and token holders were not affected.

First Digital said it followed Techteryx's instructions

In response to CoinDesk’s request for comment, First Digital CEO Chok categorically denied any wrongdoing or involvement in any fraudulent scheme.

Chok said in an email that First Digital Trust acted solely as a fiduciary intermediary and executed transactions strictly in accordance with instructions provided by Techteryx and its representatives. He added that the company was not responsible for independently evaluating or advising on these investment decisions.

“We understand that one of the main obstacles to ARIA’s refusal to redeem the funds early as requested by Techteryx was their concerns about anti-money laundering (AML) and know-your-customer (KYC) issues regarding the transactions between TrueCoin and Techteryx, particularly regarding the true identity of Techteryx’s ultimate beneficial owners,” Chok said in an email to CoinDesk, adding that he does not believe any of the parties involved in the case believe Aria lacks liquidity.

“We have not yet had the opportunity to fully defend ourselves,” Chok said in the email. “We will do our best to clarify these issues as the legal and arbitration proceedings proceed.”

In response to CoinDesk's request for comment, Aria Group's Matthew Brittain said that he "completely denies the allegations made by Techteryx against ARIA DMCC and any associated entities."

"A number of false allegations have been made