Bloomberg: A significant portion of the reserves supporting TrueUSD is invested in a high-risk offshore fund

Following an investigation, the U.S. Securities and Exchange Commission (SEC) has accused TrueCoin LLC and TrustToken Inc., the companies behind TrueUSD, of making false claims that their stablecoin is fully backed by US dollars or equivalent currencies. In fact, it has been reported that a significant portion of the reserves backing TrueUSD were invested in a high-risk offshore fund. Representatives for TrueUSD have not responded 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 rule was clearly violated here. It's ironic that TrueUSD would do such a thing." If the SEC's allegations against TrueUSD are accurate as Campbell suggests, then this is a textbook case of fraud rather than something unique to cryptocurrencies. However, due to the branding effect of "cryptocurrency", one could argue that this reflects an issue unique to the cryptocurrency field.

The media mentioned in previous reports that ownership structure of TrueUSD is complex and opaque with control transferred to an offshore entity called Techteryx Ltd., whose reserves also moved to banks in The Bahamas. At that time, they told media outlets they moved funds there because banking conditions for U.S crypto businesses were deteriorating rapidly; closures at Silvergate Bank, Silicon Valley Bank and Signature Bank had left many crypto firms struggling. Like many American cryptocurrency companies at the time ,TrueUSD’s parent company was urgently seeking new solutions for cash holdings . While most people from other industries would reject such actions outrightly ,many agreed in case of  Truusd . People fall into these hype traps because one core concept about cryptocurrency is its trustless nature - you don't need to trust any third party which makes them believe assets on blockchain provide better solution than traditional finance industry.