TrueUSD (TUSD) Attestation Still Shows 99.7% of Reserves Held at First Digital Trust Despite SEC Settlement

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 Securities and Exchange Commission (SEC) recently settled with TrustToken and TrueCoin, the former operators of TrueUSD (TUSD), over allegations that the firms sent the backing for the stablecoin to “a speculative and risky offshore commodity fund.”

According to the SEC's complaint, the fund, which was offered by First Digital Trust in Hong Kong, engaged in trade finance, structured trade, export finance, import finance, supply chain financing, and project financing of various entities. The complaint further alleged that more than 99% of the assets backing TUSD were placed in this speculative fund.

The SEC's investigation revealed that TrueCoin and TrustToken became aware of redemption issues at the fund in 2022. However, they failed to disclose this material information to TUSD holders or the public, in violation of federal securities laws.

It's important to note that this settlement didn't include Techteryx, the firm that now owns TrueUSD. Techteryx has repeatedly denied that it's under the control of Justin Sun, who was described as an “Asia markets advisor” for TrueUSD. However, the former chief executive of TrustLabs has claimed that Sun tried to acquire the firm.

A recent 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.

The attestation was conducted by Moore Hong Kong, the same firm that was involved in the SEC's investigation. In its attestation, Moore Hong Kong valued investments in that fund “at cost” and noted 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.

Moreover, the notes from Techteryx management, which were signed by Jennifer Jiang (also of Sun-affiliated BiT Global, Sun-owned Polonieix, 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 consist of approximately $502 million held at First Digital and approximately $1 million in cash.

Protos reached out to TrueUSD to identify the fund in which it is currently invested, but the company did not immediately respond.