Revealing the Reasons Behind the Anger Towards FDUSD? TUSD Faces Cash Crunch After Nearly 500 Million Reserve Issues, Justin Sun Steps in Urgently Amidst Rising Doubts

TrueUSD (TUSD) Faces Liquidity Crisis Amid $456 Million Investment Error

Recently, it was revealed that the reserves of the well-known stablecoin TrueUSD (TUSD) have nearly $456 million rendered illiquid due to investment errors, directly impacting its liquidity. Ultimately, it was the intervention of prominent figure in the cryptocurrency sphere, Justin Sun, that barely stabilized the situation. This financial storm involves a Hong Kong trust company, Dubai traders, offshore funds, and a series of unauthorized investment operations, creating a narrative as complex as a financial thriller.

Perhaps due to the detailed exposure of this case by CoinDesk, Justin Sun, who took over TrueUSD (TUSD), has suddenly been implicated in news regarding the insolvency of FDUSD, the fifth largest stablecoin, as the issuer is connected to TrueUSD’s reserves.

Techteryx’s “Reserve Operation Black Hole” After Acquiring TrueUSD

Since acquiring TrueUSD from TrueCoin in December 2020, Techteryx has entrusted Hong Kong’s First Digital Trust (FDT) with managing the reserve funds. However, assets that were supposed to be used for value preservation were instead redirected to the Cayman Islands-based Aria Commodity Finance Fund (Aria CFF).

Legal documents provided by the U.S. law firm Cahill Gordon & Reindel reveal that as much as $456 million was incorrectly transferred to another unauthorized entity located in Dubai, Aria Commodities DMCC.

Dubai Company “Funds Disappeared”: The Dual System Operated by a Couple

According to court documents, Aria CFF is controlled by Matthew Brittain, who manages it through Aria Capital Management Ltd, while the Dubai-based Aria Commodities DMCC has his wife, Cecilia Brittain, as the sole shareholder. Although the two companies appear to operate separately, Matthew’s email signature originates from Dubai, suggesting potential overlap in actual operations. In an email to CoinDesk, Matthew stated that Aria CFF is responsible for financing commodity traders, including Aria DMCC, indicating a close relationship between the two.

From Investment Fund to “Fake Loans”? FDT CEO Accused of Manipulating Suspicious Transactions

According to Hong Kong court documents, First Digital CEO Vincent Chok is accused of directing a payment of $15.5 million in undisclosed commissions to an entity named “Glass Door,” while also mispackaging the $456 million in funds as trade finance loans. These amounts were later modified to be classified as “fund investments,” which the plaintiffs argue constitutes fraudulent misrepresentation and fund misappropriation.

The lawsuit states: “These remittances are entirely unauthorized misappropriations and money laundering activities.”

Techteryx Unable to Withdraw Funds, Justin Sun Steps In with Emergency Funding

From mid-2022 to early 2023, Techteryx attempted to redeem funds from Aria CFF but was nearly unable to obtain any money. Aria failed to fulfill payment requests, putting TrueUSD on the brink of reserve depletion. According to complaint documents submitted to the U.S. Department of Justice, it was at this time that Justin Sun provided an emergency loan to inject liquidity into TUSD. Techteryx subsequently isolated 400 million TUSD to ensure users could still redeem, avoiding market panic.

FDT and Aria Both Refute Claims: We Were Just “Following Instructions”

In response to CoinDesk, FDT CEO Chok denied any wrongdoing, emphasizing that the company was merely executing fund transfers based on instructions provided by Techteryx, without responsibility for assessing or advising on investment targets. He also stated that Aria’s refusal to redeem the funds early was due to doubts about the ultimate beneficiaries of Techteryx.

Similarly, Aria’s Matthew Brittain denied all allegations, claiming that the legal documents are filled with misstatements. He asserted that Techteryx was clearly aware that the funds were subject to “time restrictions,” which were disclosed in the fund’s prospectus.

TrueCoin, the Former Holder of TUSD, Also Penalized by the SEC, Further Damaging Trust in Stablecoins

As if the situation couldn’t get worse, in September 2024, the U.S. Securities and Exchange Commission (SEC) reached a settlement with TrueCoin and its former brand TrustToken. The SEC accused them of falsely claiming that TrueUSD was backed 100% by dollar reserves, while in fact, some funds were invested in high-risk offshore funds. Though neither party admitted wrongdoing, TrueCoin and TrustToken agreed to pay over $500,000 in fines and illegal profits to resolve charges of fraud and unregistered securities issuance.

Banking Partner Prime Trust Faces Issues, TUSD Enters Multiple Trust Crises

The fate of TUSD is not only weighed down by investment controversies but also by unstable financial infrastructure. Prime Trust, which managed fiat deposits and withdrawals for TUSD, was taken over by regulators in Nevada in mid-2023. According to court documents, Prime Trust had only about $3 million in accessible assets at the time, yet was responsible for approximately $85 million in customer fund obligations. This dual trust crisis has severely challenged the stability of TUSD.

The “Unstable Truth” of Stablecoins

What should have been a stable TUSD has been revealed to be heavily reliant on individual decisions and opaque institutional collaborations. As reserve funds are trapped in Dubai and regulatory scrutiny looms, the financial lifeline provided by a cryptocurrency magnate has become the last line of defense. This incident has once again sparked widespread concern regarding the transparency of stablecoin reserves, investment strategies, and regulatory risks. For users, a seemingly secure “stablecoin” may hide unnoticed financial landmines.

Risk Warning

Investing in cryptocurrencies carries a high degree of risk, with prices potentially experiencing significant volatility. You may lose your entire principal. Please evaluate risks carefully.