Justin Sun, the founder of Tron, assisted TrueUSD when the stablecoin faced significant liquidity issues due to bad investments totaling $456 million.
Emergence of Liquidity Issues with TrueUSD
Hong Kong court filings indicated that TUSD's fiduciary made questionable financial decisions and unauthorized investments, leading to a severe cash shortage. Techteryx, the parent company of TUSD, discovered that most reserves were tied up in illiquid investments. First Digital Trust (FDT), responsible for managing these funds, was meant to invest them in the Aria Commodity Finance Fund (Aria CFF) but instead sent the funds to Aria Commodities DMCC, a Dubai company involved in trade finance and commodity trading. When Techteryx attempted to withdraw the funds, Aria DMCC failed to return them, causing a critical liquidity shortage for TUSD.
Justin Sun's Stabilization Actions
With TUSD's reserves locked, the stablecoin's price and user trust were at risk. To prevent a collapse, Justin Sun injected capital into TUSD to allow users to redeem their tokens. Techteryx also reserved 400 million TUSD for stability.
Reactions of Participants and Follow-Up Events
Court papers charge FDT with mismanagement and fraud, claiming it extended unauthorized loans to Aria DMCC and misrepresented them as legitimate investments. FDT’s CEO, Vincent Chok, claims innocence, stating that the company acted on Techteryx's direction. Aria Group's Matthew Brittain also denies allegations, stating that transactions were clear. TUSD faced additional challenges after its partner, Prime Trust, collapsed amid fraud allegations. The SEC also fined previous owners for misrepresenting full dollar backing when investing in risky offshore funds.
Justin Sun's intervention in the TrueUSD situation helped to stabilize the crisis and restore user trust, though the long-term resilience of the stablecoin remains in question.
