Justin Sun Provides Bailout for TrueUSD Amid $456 Million Reserve Issues
Justin Sun provided emergency liquidity support to Techteryx's TrueUSD stablecoin after nearly $456 million of its reserves became illiquid. The issues stemmed from improper fund diversions managed by First Digital Trust (FDT) into an unauthorized entity, Aria Commodities DMCC.
Key points:
- Techteryx acquired TrueUSD in December 2020 and appointed FDT for reserve management.
- Funds were allegedly misdirected from the Aria Commodity Finance Fund to Aria Commodities DMCC.
- Court documents indicate misappropriation and fraudulent misrepresentation involving around $30 million.
- TrueUSD faced challenges in redeeming investments due to defaults from Aria entities.
- Sun's support included a structured loan to maintain retail redemptions while quarantining $400 million TUSD.
- First Digital's CEO denied wrongdoing, asserting that they acted strictly on Techteryx's instructions.
- In mid-2023, Prime Trust, a banking partner for TrueUSD, collapsed amid regulatory scrutiny.
- TrueCoin and TrustToken reached a settlement with the SEC over misleading marketing regarding TrueUSD's backing.
The situation highlights significant operational and regulatory challenges facing Techteryx and the TrueUSD stablecoin.