TrueUSD was not very true

The issuers of the stablecoin TrueUSD (TUSD) were not honest about what was backing it, according to a complaint that preceded a settlement with the SEC, which was announced Tuesday.

Why it matters: Stablecoins that say they are based on 1-to-1 backing with U.S. dollars need to have those dollars on hand.

Friction point: TrueUSD was not, the SEC alleges, backing its tokens with dollars, at least not entirely.

• Instead, it was heavily investing deposits into some kind of commodity fund, presumably to earn profits for the issuer.
• But that's not how the complaint says it represented the backing to its customers.

💭 Our thought bubble: I wrote about TrustToken's initial fundraise six years ago, when it was offered on the token sales site that was pickiest about projects it would support, CoinList.

• But its stablecoin always lagged the market leaders (despite decent uptake) and, in 2020, it announced a sale to "an Asian consortium" that just seemed very off.
• Note that the period the SEC criticizes starts just a few weeks before that announcement.

By the numbers: There's still almost a half-billion in TUSD in the market, but that's well down from the nearly $4 billion in supply it once represented.

The bottom line: The payments weren't very high in this case, a few hundred thousand dollars between various entities.

• But we still don't really know who took the project over.