Bloomberg: A significant portion of the reserves backing TrueUSD is invested in a high-risk offshore fund
ChainCatcher news, according to Bloomberg, after an investigation, the U.S. Securities and Exchange Commission (SEC) has charged TrueCoin LLC and TrustToken Inc., the companies behind TrueUSD, with making false statements about the stablecoin being fully backed by U.S. dollars or equivalent currencies. It has been reported that a significant portion of the reserves supporting TrueUSD is invested in a high-risk offshore fund. Representatives of TrueUSD did not respond to requests for comment.
Austin Campbell, head of a blockchain consulting firm, wrote on X: "The first rule is not to deceive your investors and users, and this clearly violates that rule. It's ironic that TrueUSD would do this." If, as Campbell suggests, the SEC's charges against TrueUSD are accurate, then this is a textbook case of fraud, not necessarily unique to "cryptocurrency." However, due to the branding effect of "cryptocurrency," TrueUSD can be said to reflect a problem unique to the cryptocurrency space.
The media mentioned a previous report stating that TrueUSD's ownership structure is complex and opaque, with control shifting to an offshore entity named Techteryx Ltd., and its reserves being moved to a bank in the Bahamas. At that time, the company told the media that it moved funds to the Bahamas because the banking conditions for U.S. cryptocurrency firms were deteriorating. The failures of Silvergate Bank, Silicon Valley Bank, and Signature Bank had put many cryptocurrency companies in a difficult position. Like many U.S. cryptocurrency firms, TrueUSD's parent company was also eager to find new solutions to hold cash. In other industries, people would generally reject such moves; however, in the case of TrueUSD, many agreed. The reason people fall into this hype and misconception is that a core principle of cryptocurrency is that it is trustless, meaning you do not need to trust any third party. Therefore, people believe that assets on the blockchain offer a better solution than traditional finance.
