TrueUSD, a dollar-pegged stablecoin connected to Justin Sun, has its real-time attestations from The Network Firm paused at press time, with the ‘balances’ Ripcord active.
The attestation system describes the ‘balances’ ripcord: “During the last reporting interval, the LedgerLens System received responses, errors, or non-responses from third-party systems or accounts resulting in the sum total of liabilities being greater than the sum total of the relevant assets.”
It continues, “Commonly, over the historical operation of the System, the Balances ripcord is triggered by temporary imbalances seen in normal operations (such as funds in transit, or Management opening a new bank account not yet integrated into the System). However, the Balances ripcord can also be triggered due to an actual imbalance of liabilities and corresponding assets.
“Such a condition starts an inquiry with Management by the Attestation Provider. In all cases, the Balances ripcord expires after 72 hours; if the imbalances exist after 72 hours, and no other ripcords are triggered, the System will generate a new attestation report showing the point in time balances obtained by the System.”
Read more: TrueUSD was hacked and issued fake tokens
TrueUSD responded to Protos to note that the ‘Balances’ ripcord “was accidentally triggered by reserve fund movements between banks and it has been fixed.”
TrueUSD attestations have had a warning for several months. “Our examination disclosed that on April 21, 2023, the agent of Techteryx opened a conventional corporate account with a Swiss depository institution with terms within the account’s ‘General Terms and Conditions’ (“Terms”) that do not explicitly specify that the related funds are escrowed on behalf of TUSD token holders or that Techteryx and the agents are not entitled to any funds at any time and no amounts deposited into the accounts shall become the property of Techteryx, the agents, or any other entity, or be subject to any debts, liens or encumbrances of any kind of Techteryx, the agents, or any other entity.
“Techteryx and its agents began utilizing the account starting on June 13th, 2023, which maintained balances contributing to the total USD Denominated Collateral held in Accounts within the TrueUSD Holdings Report. Techteryx and it’s agents have initiated deliberations with the Swiss depository institution to modify the account’s Terms to explicitly adhere to the Notes to the TrueUSD Holdings Report.”
Despite the many months since this warning was introduced it is still present, suggesting Techteryx has been unsuccessful in its “deliberations with the Swiss depository institution to modify the account’s Terms.” TrueUSD told Protos that “the Custody Agreement has been under legal review process by the Swiss bank which is beyond our direct control.”
Additionally, the attestations warn that “In Note 2 to the TrueUSD Holdings Report, “Other Instruments” are included in the subject matter of this report. Other Instruments refers to subscriptions by the Hong Kong Depository Institution in a single Fund, held in trust accounts for benefit of token holders, with capital invested by the Fund Manager.
“The share classes held within the fund mature at various future dates and per the Fund Manager’s prospectus, are reported at cost. Our examination does not include an examination over the fair market value of the investments with the Fund Manager, and is limited to the reported cost in the Notes to the TrueUSD Holdings Report.”
Despite these issues, TrueUSD have recently encouraged users to explore their “achievements in multi-chain adoption, security advancements, user-centric upgrades, and more!” Interestingly, despite the insistence that it has made ‘security advancements’ recently, TrueUSD appeared to have its deployer address compromised, as well as user information was also compromised.
Protos has reached out to TrueUSD to attempt to gain additional information about why the attestations are paused. We will update this piece if we hear back.
Update January 11th, 15:06 UTC: The article was updated to add comment from TrueUSD.