TrueUSD (TUSD) Exchange Holdings May Be Inflated by $406 Million of Unprocessed Redemptions

TrueUSD (TUSD) is a stablecoin that is pegged to the US dollar. It was launched in 2018 by a consortium of companies that includes TrustToken, Kanaval Technologies, and BlockTower Capital. TrueUSD is designed to be fully backed by fiat currency that is held in a trust account with a Hong Kong depository institution.

According to CoinGecko, TrueUSD's market capitalization is currently $497 million. However, these numbers may be inflated by up to $406 million TUSD tokens that Justin Sun-advised HTX has transferred to addresses that may be redemption addresses.

Redemptions of TrueUSD involve clients sending funds back to specially designated redemption addresses that look a little strange. TrueUSD explained:

“This address is very simple and contains many ‘0’s. This is intentional. You can redeem from any wallet (including exchange wallets) to this address, and all redemptions received by this address will be associated with your TrueUSD account.”

Just over 100 days ago, HTX sent 80 million TUSD tokens to 0x7000000Cd0fc88461a74C9df0809B58E7F60ad34. This address appears to be one of the very simple addresses that would count as one of those redemption addresses.

There are also several other HTX transactions that appear as though they may be redemptions, but the addresses in question are different. These include transactions of $90 million and $7.5 million TUSD that were sent to 0xd423022fFc3aA8915924DD484044987BC0A4c261, which appears substantially different than other burn addresses.

However, previous analysis by Blockchain Analysis ChainArgos has highlighted other addresses that don’t seem to fit TUSD’s description of burn addresses. Additionally, this address that received approximately $97.5 million from HTX has not sent it further along and is not included in the HTX proof of reserves.

Both the clear redemption address and the less obvious redemption address include the same style of “self” transaction after receiving the initial transfer.

This same style of transfer followed by self-send can be seen in 0x2bb12A057e69775Ae8b68019BC1Bf21FCC95CA7d, which just over 100 days ago received approximately $78 million TUSD tokens from HTX. This address is also not included in HTX’s proof of reserves.

However, if these are redemptions, they haven’t been fully processed. We can see this by looking at other known redemption addresses like 0x0000000000000000000000000000000000000525, where we can see normally when funds are sent to a redemption address they are then burnt by sending the funds to null.

This pattern is repeated on TRON, where HTX sent $80 million TUSD tokens to TJXauPDFPnYsfJWM88QwPxfD7nQG1F59tk just over 100 days ago. This address is also not included in the HTX proof of reserves.

Furthermore, at the same time, HTX sent $70 million TUSD to TAyq685VnD55CAS2YuAFcibsCqdqzF1ocN. This address is also not included in the HTX proof of reserves.

This leaves us struggling to determine why assets have been left in these addresses for so long, without redemption or inclusion on the HTX proof of reserves.

One clue may come in the attestations provided for TrueUSD. Moore Hong Kong’s report notes that “there is litigation between the Company and the Hong Kong Depository Institution in relation to the redemption of the fund, which may suggest potential liquidity and credit risks of the TrueUSD reserves.”

The Hong Kong depository institution is First Digital Trust, which was also highlighted in the recent Securities and Exchange Commission (SEC) settlement with TrueUSD.

This settlement alleged that TrueCoin and TrustToken, firms that operated parts of TrueUSD, were aware of serious issues with the assets, knowing that “more than 99% of the assets backing TUSD were invested in” a risky fund that invested in “trade finance, structured trade, export finance, import finance, supply chain financing, and project financing of entities.”

Portions of the legal jockeying between Techteryx and TrueCoin in Singapore have been obtained by Protos, and these documents provide additional context, including noting that redemptions in one of the funds that First