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Major Stablecoins Embrace Transparency But TUSD Favors the Opaque Look

Binance-supported and Justin Sun-linked True USD has bucked the trend for more transparency in the stablecoin market, as full control of reserves and private keys has now passed to mysterious offshore owner Techteryx. Should we be concerned?

TrueUSD (TUSD) has commenced the final stage of a transition it started back in December 2020 when ownership of the business transferred to an Asia-based consortium known as Techteryx. According to the official Twitter account, in a process starting from July 13:

“Techteryx will assume full management of all offshore operations and services related to TUSD, including minting and redemptions… Plus customer onboarding and compliance, as well as fiat reserve and supervision of all banking and fiduciary relationships.”

Who is the mysterious Techteryx?

This wouldn’t be particularly newsworthy, except for the fact that TrueUSD rose from pretty much nowhere to be the fifth-largest stablecoin in the world following support from Binance back in March, and the fact that nobody knows very much about Techteryx at all.

At the time of the sale back in 2020, the TrueUSD blog didn’t even name Techteryx as the buyer, instead posting that “Ownership of TUSD will be moving over to an Asia-based consortium that will be working with TRON to develop TUSD on Ethereum, TRON, and other blockchain networks.”

Ironically, in the same post it described itself as “the most transparent stablecoin in the market,” although this was not in relation to the opaque takeover bid. The ownership change was to bring additional resources and a global network to TrueUSD, and previous owner, ArchBlock, was kept on to manage operations for a transitionary period.

Many commentators suggested that Techteryx was not just working with Tron, but was in fact owned by Tron supremo Justin Sun. This has been repeatedly denied, although from at least June 2021 until January 2022, Sun was listed as ‘Asia Market Advisor’ on the TrueUSD website.

As we Observed, TrueUSD’s fortunes changed markedly in March this year when Binance eliminated zero-fee trading on the platform, except for the BTC-TUSB pair. This saw the token’s market cap rise considerably, from around $1 billion to over $3 billion at one point, bringing it into the top five stablecoins.

Justin Sun definitely doesn’t own TrueUSD, does he?

In May Sun described himself as a partner market maker for TUSD, after being reprimanded on Twitter by CZ for transferring 56.1 million TUSD to Binance ahead of the platform’s Sui token Launchpool. Just days later, it was reported that control of TrueUSD private keys had been transferred to Techteryx.

The same day, Cinneamhain Ventures partner Adam Cochran took to Twitter asserting that Techteryx was “Justin Sun’s conglomerate,” which now controlled the private keys and was growing the market cap with no real proof of backing.

TrueUSD hit back stating that it was never owned by Justin Sun and that smearing the stablecoin’s real-time Proof of Reserve was a “despicable act,” and threatened to sue for defamation.

However, Cochran doubled down on his claims, pointing out that such a case would “open all affiliated entities to discovery including Techteryx and Archblock, including a breakdown of ownership and UBOs.”

He also noted that, although Techteryx is supposedly registered in Singapore it does not come up in any database searches, and that Sun had previously bought Poloniex through an “Asian Based Consortium” and initially denied it.

Finally, Cochran suggested that if Sun wasn’t involved then it would be very easy to be transparent about the company’s operating structure, “which should be in the interest of a trusted and transparent stablecoin, and something that TrustToken did really well under Archblock initially.”

Notably, there has been no response to this from TrueUSD.

So where now for asset-backed stablecoins?

So on July 13 TrueUSD began the final stage of its transition to becoming fully controlled by Techteryx (although existing U.S. users will apparently continue to be supported by ArchBlock until the change of control is final).

What does that mean for the stablecoin market? Well, research firm Kaiko coincidentally published a deep-dive into the state of stablecoins on the day before the TrueUSD announcement. In it, the firm noted the rapid rise of TUSD and raised concerns about the lack of transparency regarding its reserves and corporate structure.

“While Circle has made huge efforts to improve USDC transparency (and even Tether has made some efforts over the past year), the relatively unknown TUSD is today posing the biggest risk, offering the least information about its reserves or corporate structure.”

Regarding its potential to influence the stablecoin market, Kaiko stated that TrueUSD was not yet systemically important, but due to its apparent endorsement by Binance, perhaps the most influential exchange, its activity should be closely Observed, which we fully intend to do.