After Settlement with SEC, 99.7% of TUSD Reserves Still Backed by Speculative Assets

A review of TrueUSD’s proof shows that, despite the allegations in a previous settlement with the U.S. SEC, about 99.7% of the stablecoin’s reserves are still held by First Digital Trust. Notably, the settlement does not include Techteryx, the company that now owns TrueUSD. The company has repeatedly denied that it is controlled by Justin Sun, despite claims by the former CEO of TrustLabs that Sun had attempted to acquire the company. The proof further states that the company behind it, Moore Hong Kong, values ​​the fund’s investments “at cost” and ensures that its “procedures do not include a review of the fair market value of the investments within the fund.” This means that even if the fair value of the assets in the fund has fallen to zero, the proof will continue to report the value of the investments at cost. In addition, the note from Techteryx management also states that these assets “may not be readily convertible to cash, depending on market conditions or fund performance.” Currently, the approximately $495 million in TUSD reserves consists of approximately $502 million held by First Digital and approximately $1 million in cash. (Protos) Previously, at the end of September, the U.S. SEC said it had reached a settlement with TrueCoin LLC and TrustToken Inc. after it accused the latter of selling the stablecoin TrueUSD. The SEC pointed out that TrueCoin is the issuer of TrueUSD (TUSD) and TrustToken is the developer of the lending protocol TrueFi. Neither TrueCoin nor TrustToken admitted or denied the agency's allegations and agreed to pay a fine of $163,766 each. According to a statement released by the SEC on Tuesday, TrueCoin also agreed to pay $340,930 in illegal gains. From November 2020 to April 2023, TrueCoin and TrustToken “engaged in the offer and sale of unregistered investment contracts in the form of the crypto asset TUSD on TrueFi, as well as profit opportunities related to TrueUSD.” The SEC said the two companies also “falsely promoted the investment opportunity as safe and secure” and fully backed by U.S. dollars or dollar-equivalent assets, when in fact, most of the assets were invested in “speculative and high-risk offshore investment funds to earn additional returns. By September 2024, 99% of the reserves backing TUSD were allegedly invested in speculative funds.”