What’s up with TrueUSD and the rest of TrustToken’s stablecoins?

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The market cap of TrueUSD has more than doubled in the last month to over $2 billion. TrustToken Incorporated, one of the companies behind the True family of tokens advertises them as “maximally transparent,” but the reality is somewhat different.

Who owns TrueUSD?

TrueUSD (TUSD) was launched in 2018 by California-based TrustToken Incorporated. It has always been a minority stablecoin, lagging behind market leaders like Tether and Circle, first reaching a market cap of $1 billion in early May 2021 when it nearly tripled in less than a week.

Several months earlier, in December 2020, TrustToken announced that it would be switching to a new ownership structure. Further details were given on the MakerDAO governance forum which described how the ownership structure was changing.

It outlined how the business was being acquired by Techteryx, an Asia-based conglomerate that worked in “traditional real estate, entertainment, environmental, and information technology industries.” The post also maintained that Jennifer Jiang, the lead investor for the entity that Techteryx created to acquire TUSD, was an experienced investor who was “deeply connected.”

Despite this new ownership structure, TrustToken maintained that Techteryx would not control the funds or the private keys.

The firm also made sure to emphasize that its ownership was not tied to Justin Sun. A point it felt the need to emphasize due to the fact that Sun was using an Asia-based conglomerate to make other purchases, including BitTorrent.

Sun used to be listed as the ‘Asia Market Advisor’ on TrueUSD’s website but has since been removed.

Things became even more complicated in September 2022 when TrustToken Inc. announced that it was re-branding as Archblock.

Archblock has clarified that it is a separate entity to Techteryx, and that Sun does not own a stake in Archblock. Archblock also said that there is no current business relationship with Justin Sun, noting he is no longer its ‘Asia Market Advisor.’ Archblock also said that it is not in a position to describe what other businesses Jennifer Jiang is a part of.

What other True products exist?

Besides the dollar-pegged TrueUSD, TrueToken also offers several other stablecoins, including:

TrueAUD, pegged to the Australian Dollar,
TrueHKD, pegged to the Hong Kong dollar,
TrueCAD, pegged to the Canadian dollar,
TrueGBP, pegged to the British pound.

There is also an uncollateralized DeFi lending platform called TrueFi, and a multi-stablecoin pool called TrueFx.

Nominally at least, control of TrueFi has been handed over to a DAO that will run it, though the TrueFi Foundation, based out of the British Virgin Islands, still helps oversee it. The governance of the DAO is managed by the TRU token.

TRU market cap graph from CoinMarketCap.

Alameda Research was a lead investor in TrustToken and the TRU token.

Notably, TrueFi has seen the pace of loans it has extended fall precipitously after several key borrowers, including Alameda Research, defaulted. Alameda defaulted on approximately $7.3 million in USDC loans that were extended by TrueFi and managed by the TrueTrading team.

According to a post in the TrueFi forum, TrueTrading is a wholly-owned subsidiary of Archblock.

TrueFX is also described on the TrustToken homepage as ‘a stablecoin basket built on all five TrueCurrencies.’ Protos was unable to find any more details about a stablecoin basket but an earlier Medium post from TrueFi did describe TrueFX as the LP tokens for a Balancer pool containing the five stablecoins. There is currently only $13.7k in liquidity in this pool.

Archblock has clarified that, “TrueFX is the old name of all stablecoins we operate. Going forward, we will call this TrueCoin to avoid confusion” and that “the Balancer pool is a proof of concept only.”

Attestations and reserves

The True family of stablecoins is marketed as ‘maximally transparent’ and it’s claimed that they are ‘independently attested’ with ‘live updated proof of reserves.’ This is offered through the TrustExplorer product which is meant to give users a view into the current status of the reserves and the tokens on the blockchain. It also allows users to easily retrieve the most recent independent attestation.

However, the attestations seem to have stopped. The last one available for TrueUSD is from December 31, 2022, and TrueAUD, TrueCAD, and TrueGBP all have their most recent attestations dated January 31, 2023.

TrueHKD doesn’t have any attestations available, nor is it available in the TrustExplorer, which is meant to provide real-time insight.

Archblock claimed to Protos that it is possible to find the attestation for TrueHKD using “an embedded widget on the archblock.com/truecoin sites.” A review of that site by Protos was unable to locate a TrueHKD attestation and we have reached out to Archblock for further clarification.

Archblock later said: “We will be updating the website with regard to TrueHKD to state that due to low volumes, limited user base, and use cases for THKD, we decided to no longer support live attestations. Should anyone have any questions, they may reach out to [email protected].”

These attestations were being prepared by Armamino LLP. The company also audited FTX US, which it was reported has left the cryptocurrency ecosystem.

The TrustExplorer website says: “A new CPA firm dedicated to serving the digital assets industry will sign off on the real-time assurance reports later in Q1 2023.” This leaves TrustToken/Archblock a few days to finish its next attestation.

Archblock states that “After Armanino LLP decided to stop serving companies working in crypto, we engaged with a new firm that expects to go live later this week with the same attestation frequencies.”

TrustExplorer used to show which banking partners were holding the reserves for the various tokens but this feature looks to have been disabled shortly after crypto research firm ChainArgos pointed out that it showed funds being moved from Signature Bank to other firms. Archblock says that this change in behavior is related to the “transition for the attestation reinstatement with the new auditor.”

Interestingly, the amount noted by ChainArgos seems to be the same amount that Bloomberg reported was moved to Capital Union in the Bahamas. TrueUSD’s market cap has increased by a similar amount over the last couple weeks.

On-chain behavior

ChainArgos has noted that TrueUSD is burned and issued far more frequently than competing stablecoins like USDT and USDC.

The researcher has also highlighted how the two largest minters for TrueUSD were Justin Sun and Alameda Research.

There is strangeness in the on-chain behavior of other True stablecoins. Blockchain analysis conducted by Protos noted that FTX was one of the largest holders of TrueAUD, despite not seeming to support the token.

The Finder Earn product, which is currently the subject of a lawsuit by Australian regulators, involved Finder converting customer deposits into TrueAUD and then using them to earn yield.

Finder Wallet sued by Australian regulators for unlicensed Earn product

It’s unclear how Finder would earn that yield, but Finder’s directors had previously sold their over-the-counter (OTC) trading desk to Alameda Research and it was used to bank FTX.

Finder was not the only Australian firm to use TrueAUD as part of a yield product. Swyftx had a very similar product which has also since been discontinued. The Australian Financial Review reported that Swyftx purchases almost all of the cryptocurrency for its customers through Binance, though it has claimed to be distinct from the exchange.

Both Celsius and Crypto.com seem to have previously offered yield on TrueAUD.

What is TrueUSD up to?

Figuring out the true ownership of these interconnected entities isn’t easy. TrueUSD specifically exhibits a pattern of sudden and massive increases in market cap along with unusually active burning and minting.

At least one of the stablecoins offered by this team appears to have no attestation and the rest have increasingly stale attestations. Meanwhile, the team was at one point advised by Justin Sun, a marketer who has stolen the design of a failed stablecoin for his own.

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Edit 16:20 UTC, Mar 22: Added comments from Archblock clarifying the relationship between Justin Sun and Archblock and noted that Archblock is a distinct entity from Techteryx. Also provided additional clarification on the purpose of TrueFX and added comment from Archblock confirming a new auditing partner. Further noted that Archblock claims that the TrueHKD attestations are available, though Protos has been unable to locate them.

Edit 16:45 UTC, Mar 22: Clarified that Archblock will not be including TrueHKD in the live attestations and is in the process of updating its website. Removed an incorrect note about the time that the Terra Luna system collapsed.