TrueUSD Reserves Under Scrutiny Amid SEC Settlement

According to Odaily, an examination of TrueUSD's reserves reveals that approximately 99.7% of the stablecoin's reserves are held by First Digital Trust, despite previous allegations in a settlement with the U.S. Securities and Exchange Commission (SEC). Notably, the settlement does not involve Techteryx, the current owner of TrueUSD, which has consistently denied being controlled by Justin Sun, despite claims from TrustLabs' former CEO that Sun attempted to acquire the company. The audit further indicates that Moore Hong Kong, the company behind TrueUSD, values the fund's investments at "cost" and ensures that its "procedures do not include a review of the fair market value of investments within the fund." This implies that even if the fair value of the assets in the fund drops to zero, the audit will continue to report the value based on cost. Additionally, Techteryx's management notes that these assets "may not be easily convertible to cash, depending on market conditions or fund performance." Currently, approximately $495 million of TUSD reserves consist of about $502 million held by First Digital and around $1 million in cash. In late September, the SEC announced a settlement with TrueCoin LLC and TrustToken Inc. following charges related to the sale of the stablecoin TrueUSD. The SEC identified TrueCoin as the issuer of TrueUSD (TUSD) and TrustToken as the developer of the lending protocol TrueFi. Both companies neither admitted nor denied the SEC's allegations and agreed to pay fines of $163,766 each. According to a statement released by the SEC on Tuesday, TrueCoin also agreed to pay $340,930 in disgorgement. From November 2020 to April 2023, TrueCoin and TrustToken engaged in the unregistered offering and sale of investment contracts in the form of crypto assets TUSD on TrueFi, along with profit opportunities related to TrueUSD. The SEC stated that the companies also "falsely marketed the investment opportunities as safe and reliable," claiming they were fully backed by U.S. dollars or equivalent assets. In reality, a significant portion of the assets was invested in "speculative and high-risk offshore investment funds to earn additional returns." It is alleged that by September 2024, 99% of the foreign exchange reserves supporting TUSD were invested in speculative funds.