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Recently, the Securities and Exchange Commission (SEC) settled with TrustToken and TrueCoin, previous operators of TrueUSD (TUSD), over allegations that the firms sent the backing for the stablecoin to “a speculative and risky offshore commodity fund.”
The fund, which invested in “trade finance, structured trade, export finance, import finance, supply chain financing, and project financing of entities,” appeared to be offered by First Digital Trust in Hong Kong. Allegedly, “more than 99% of the assets backing TUSD” were placed in the speculative fund.
Furthermore, the complaint alleges that in 2022, TrueCoin and TrustToken were aware of redemption issues at this fund.
Importantly, this settlement didn’t include Techteryx, the firm that now owns TrueUSD. This firm has repeatedly denied that it’s under the control of Justin Sun, described as an “Asia markets advisor” for TrueUSD, though the former chief executive of TrustLabs has claimed that Sun tried to acquire the firm.
A review of an attestation for TrueUSD reveals that approximately 99.7% of the reserves for this stablecoin are still held at First Digital Trust, despite the allegations in the previous SEC settlement.
Read more: TrueUSD bank FlowBank forced into bankruptcy
The attestation further notes that Moore Hong Kong, the firm behind it, valued investments in that fund “at cost” and makes sure to note that its “procedures do not include an examination over the fair market value of the investments within the Fund.”
This means that even if the fair value of assets in that fund had fallen to zero, this attestation would continue to report the value at cost invested.
Additionally, the notes from Techteryx management signed by Jennifer Jiang (also of Sun-affiliated BiT Global, Sun-owned Poloniex, Sun-advised HTX, and Sun-owned BitTorrent), also state that these assets “may not be readily convertible to cash, subject to market conditions or fund performance.”
Currently, the reserves for the approximately $495 million in TUSD are made up of approximately $502 million held at First Digital and approximately $1 million in cash.
Protos has reached out to TrueUSD to determine which fund it is currently invested in, but it did not immediately respond.