Justin Sun bailed out Techteryx’s TrueUSD stablecoin after nearly half a billion dollars of its reserves were rendered illiquid, people close to the matter confirmed, and the stablecoin issuer said in Hong Kong court documents.
After acquiring TrueUSD from TrueCoin in December 2020, Techteryx appointed First Digital Trust (FDT), a Hong Kong-based fiduciary, to manage its stablecoin reserves.
According to documents prepared by U.S. law firm Cahill Gordon & Reindel, FDT was instructed to invest the reserves in the Aria Commodity Finance Fund (Aria CFF), a Cayman Islands-registered vehicle. However, court filings allege that approximately $456 million was instead improperly diverted into Aria Commodities DMCC, a separate, unauthorized entity based in Dubai.
Court documents identify Matthew Brittain as controlling Aria Commodity Finance Fund (Aria CFF) through Aria Capital Management Ltd and Cecilia Brittain as the sole shareholder of the separately owned Dubai-based entity Aria Commodities DMCC.
However, emails from Aria’s Matthew Brittan are signed with an address in Dubai.
Court documents say that Cecilia is Matthew’s wife.
ARIA DMCC engages in trade finance, asset development, and commodity trading, while ARIA CFF finances commodity traders, including ARIA DMCC and third parties, according to Matthew Brittain, who described the relationship between the two companies in an email to CoinDesk.
Attestations produced by Moore CPA Limited show that FDT managed $501 million of TrueUSD’s reserves by November 2024.
Hong Kong court filings also say Vincent Chok, First Digital’s CEO, allegedly directed around $15.5 million in undisclosed commissions to an entity called “Glass Door” and separately structured approximately $15 million in unauthorized trade finance loans from FDT to Aria DMCC, later retroactively mischaracterizing them as legitimate fund investments in actions plaintiffs describe as fraudulent misrepresentation and misappropriation.
“The remittances to Aria DMCC were blatant misappropriation and money-laundering,” a statement of claim reads. “They were made without the knowledge, authorization or approval of the Plaintiff.”
These statements have not been tried in court as of press time.
Aria DMCC invested funds in global projects that they described as relatively illiquid, such as manufacturing plants, mining operations, maritime vessels, port infrastructure, and renewable energy ventures.
When Techteryx attempted to redeem its investments from Aria CFF between mid-2022 and early 202,3 it received little or no funds back, with Aria entities allegedly defaulting on payments and failing to fulfill redemption requests, the court documents say.
Techteryx then took full operational control of TUSD in July 2023, terminating TrueCoin’s involvement. As part of a transitional period following the December 2020 sale, TrueCoin continued running the day-to-day operations of TUSD.
According to court filings, Sun stepped in around this time to provide emergency liquidity support, which was structured as a loan.
The Techteryx team then quarantined 400 million TUSD so that retail redemptions could continue and token holders wouldn’t be affected, despite the stablecoin issuer’s empty coffers, the court filings said.
First Digital says it followed Techteryx’s instructions
In response to a request for comment from CoinDesk, First Digital’s Chok, categorically denied any wrongdoing or participation in fraudulent schemes.
Chok told CoinDesk that First Digital Trust acted strictly as a fiduciary intermediary, executing transactions precisely according to instructions provided by Techteryx and its representatives. He asserted that his company was not responsible for independently evaluating or advising on these investment decisions.
“It is our understanding that one of the main blockers voiced by ARIA for early redemptions of funds (as requested by Techteryx) has been their AML/KYC concerns regarding the deal between TrueCoin and Techteryx and the true identity of the ultimate beneficial owner of Techteryx,” Chok said in an email to CoinDesk, adding that he believed nobody named in the case considers Aria illiquid.
“We have not yet had the opportunity to fully defend ourselves,” Chok said in an email to CoinDesk. “We are fully committed to clarifying these matters in due course as the legal and arbitration process continues.”
Aria Group’s Matthew Brittain said to CoinDesk that he “completely rejects Techteryx’s claims against ARIA DMCC and any related entities,” adding that “a number of false allegations were made in the court proceedings.”
Techteryx was fully aware of term commitments, Brittain said, and these were outlined in contracts that subscribers have agreed to when investing in ARIA CFF, which are clearly set out in the Offering Memorandum.
Brittain also echoed Chok’s concerns about Techteryx’s beneficial ownership, pointing to Wall Street Journal coverage of the topic.
The Hong Kong writ identifies Li Jinmei as the ultimate beneficial owner of Techteryx. A spokesperson for Techteryx confirmed that this is not the same person as Jennifer Yiyang – the previous ultimate beneficial owner of the company – despite some media reporting to the contrary.
“The subscriber has not resolved these issues,” Brittain continued, referring to the beneficial ownership concerns.
Prime Trust’s collapse and SEC settlement compounds challenges
While this was happening, TUSD’s challenges continued in the form of a collapsing banking partner and regulatory scrutiny in the U.S.
In mid-2023, Prime Trust, an independent crypto custodian based in Nevada that is not connected to this case, but which TrueUSD used for its fiat ramps, was put into receivership by state regulators.
State regulators alleged Prime Trust had improperly used customer funds to cover withdrawal requests, raising serious concerns about its financial stability.
Court filings from Nevada showed that Prime Trust owed around $85 million in fiat obligations with only about $3 million available.
This wasn’t the last headache for the stablecoin issuer.
In September 2024, TrueCoin and TrustToken (the stablecoin’s owners before Techteryx) settled with the SEC over allegations they falsely marketed TrueUSD as fully dollar-backed while secretly investing reserves in risky offshore funds.
Without admitting wrongdoing, or detailing the nature of their offshore investments with Aria’s companies, both TrueCoin and TrustToken agreed to pay civil penalties and disgorge profits to the tune of just over $500,000 to resolve charges of fraud and unregistered securities offerings.
For his part, Aria’s Brittain said that investing in Aria wasn’t the right move to begin with for a stablecoin’s reserves.
“ARIA CFF has never held [its] strategy out as highly liquid, or appropriate for the reserves of a stablecoin,” he said in an email.
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