Justin Sun bailed out Techteryx’s TrueUSD Stablecoin after nearly $5 billion in reserves became illiquid, people close to the issue were confirmed and ridiculous issues were reserved in Hong Kong court documents.
Excerpt from the warrant Techteryx filed in Hong Kong
After obtaining TrueUSD from Truecoin in December 2020, Techteryx appointed First Digital Trust (FDT), a Hong Kong-based trustee, to manage Stablecoin Remerves.
According to a document prepared by US law firm Cahill Gordon & Reindel, FDT has been instructed to invest its reserves in the ARIA Commodity Finance Fund (ARIA CFF), a registered Cayman Islands vehicle. However, the court filings alleges that around $456 million has inappropriately decoupled another illegal Dubai-based entity, ARIA Product DMCC.
Excerpts from complaints made by Cahill presented to the Department of Justice
Court documents identifies Matthew Brittain as controlling the ARIA Commodity Finance Fund (ARIA CFF) through ARIA Capital Management Ltd and Cecilia Brittain.
However, an email from Aria’s Matthew Brittan is signed with his Dubai address.
Court documents say Cecilia is Matthew’s wife.
Aria DMCC is engaged in trade finance, asset development and commodity trading, while ARIA CFF finances commodity traders, including ARIA DMCC and third parties.
The certification created by Moore CPA Limited shows that FDT managed $505 million in TrueUSD’s reserves by November 2024.
The Hong Kong Court filing states that Chock directed about $15.5 million in a private committee to a company called “glass door,” and separately constituted about $15 million in unauthorized trade finance loans from FDT to ARIA DMCC, and later abused them as a legitimate fund investment as false and false false individuals.
“The remittance to the ARIA DMCC was blatant misappropriation and money laundering,” the alleged statement reads. “They were made without the knowledge, approval or approval of the plaintiff.”
These statements have not been tested in court as of the time of reporting.
Aria DMCC has invested funds in relatively non-liquid global projects, including manufacturing plants, mining operations, marine vessels, port infrastructure and renewable energy ventures.
When Techteryx attempted to redeem the investment from ARIA CFF between mid-20222 and early 202,3, the ARIA entity was said to have not met its default on payments and redemption requests, according to court documents.
Techteryx then completed full operational management of TUSD in July 2023 and ended its involvement with Truecoin. As part of the post-sale transition period in December 2020, Truecoin continued its daily operations at TUSD.
According to a court application, Sun intervened around this time to provide urgent liquidity support. This was constructed as a loan.
The Techteryx team then quarantined TUSD 400 million, allowing retail reimbursement to continue, and despite the empty funding of Stablecoin Issuer, token holders were not affected.
First Digital says he followed Techteryx’s instructions
In response to a request for comment from Coindesk, First Digital CEO Vincent Chok has firmly denied any fraud or participation in the fraud scheme.
Chok told Coindesk that First Digital Trust has carried out the transaction accurately and acted strictly to carry out the transaction according to the instructions provided by Techteryx and its representatives. He argued that his company is not responsible for independently assessing or advising these investment decisions.
“One of the main blockers Aria voiced for early redemption of funds (as Techteryx requested) was AML/KYC concerns regarding the transaction between Truecoin and Techteryx, and concerns about the true identity of Techteryx’s ultimate beneficial owner.
“We haven’t had the opportunity to fully protect ourselves yet,” Chock told Coindesk in an email. “As the legal and arbitration process continues, we are committed to making these issues clearer in time.”
Matthew Brittain of Aria Group told Coindesk that he “fully rejects Techteryx’s claims against Aria DMCC and related entities,” adding that “many false claims have been made in court proceedings.”
According to Brittain, Techteryx is fully aware of the period commitments, which are outlined in contracts agreed by subscribers when investing in ARIA CFF.
Britten also reflected Chock’s concerns about Techteryx’s beneficial ownership, pointing to Wall Street Journal reports on the topic.
The Hong Kong warrant identifies Li Jinmei as the ultimate beneficial owner of Techteryx. A Techteryx spokesman confirmed that this is not the same person as the previous ultimate beneficial owner, Jennifer Yiyan, despite reports from the opposing media.
“The subscribers haven’t solved these issues,” Britten continued, pointing to beneficial ownership concerns.
The collapse of Prime Trust and the challenges of SEC payment compounds
While this was happening, the challenges of TUSD continued in the form of collapsed bank partners and regulations scrutiny in the US
In mid-2023, Prime Trust, a Nevada-based independent crypto manager, has not been linked to the case, but the TrueUSD used for its Fiat Lamp was placed in recipients by state regulators.
State regulators allege that Prime Trust has inappropriately used client funds to cover withdrawal requests and raised serious concerns about its financial stability.
A court filing from Nevada showed that Prime Trust owes about $85 million in Fiat’s obligations, only about $3 million available.
This was not the last headache for the Stablecoin publisher.
In September 2024, Truecoin and Trusttoken (the owner of Techteryx’s former Stablecoin) settled in the SEC over allegations that they mistakenly sold TrueUs as dollar support, while secretly investing reserves in high-risk offshore funds.
Without acknowledging fraud or detailing the nature of offshore investments with Aria’s companies, both Truecoin and Trusttoken agreed to pay civil penalties and guise profits in excess of $500,000 to resolve fraud and unregistered securities claims.
On his part, Aria’s Britain said that investment in Aria was not the right move first due to the ridiculous reserves.
“Aria CFF has never held (the) strategy as very liquid or suitable for preparing Stablecoin,” he said in an email.