Sun Yuchen assists TUSD in successfully protecting global rights; after the freezing order, where will the stablecoin reserves be held?

Written by: jk, Odaily

Introduction: The Industry Implications of a Historic Ruling

“Justice may be delayed, but it will never be absent.” On November 13, TRON founder Justin Sun posted a short yet profound tweet on the X platform.

This statement responds to a ruling made by the Dubai International Financial Centre Court (DIFC): on October 17, the court officially issued an indefinite extension of the property injunction and global freeze order against the Dubai trade financing company AriaCommoditiesDMCC, involving an amount of up to $456 million.

This is the first global freeze order issued by the DIFC regarding the reserve fund case of stablecoins. The judge explicitly stated in the ruling that Techteryx (the owner of TUSD) has demonstrated “significant matters that require trial,” and the relevant funds should be held in trust to prevent improper transfer or concealment of assets before the final judgment of the Hong Kong High Court.

This case is like a mirror, reflecting the deep-seated problems accumulated in the stablecoin industry after its wild growth: the loss of control by custodians, cross-border regulatory arbitrage… More importantly, it marks a turning point for the entire industry, moving from a “crisis of trust” to “reconstruction of rules.” As the global stablecoin market cap has surpassed $200 billion, becoming the infrastructure of the crypto industry, this battle over $456 million is essentially a game about the future standards of the stablecoin industry.

1. A major case of misappropriation of reserve funds hidden for five years.

Timeline sorting

To understand the complexity of this case, we need to go back to the year 2020.

In December 2020, the Asian consortium Techteryx completed the acquisition of the TrueUSD (TUSD) stablecoin business, while entrusting the original operating company TrueCoin located in California, USA, to continue to be responsible for reserve custody services and coordinate international operations. During this transition period, TrueCoin, utilizing its trustee role, selected its partner, Hong Kong trust company FirstDigitalTrust (FDT), to manage the trust of TUSD's over $500 million fiat reserve assets and chose the offshore fund AriaCommodityFinanceFund (ACFF) as the main investment product. The actual controller of the fund is British citizen Matthew Brittain.

At the beginning of 2021-2023, the issue began to ferment. According to court documents, TrueCoin is suspected of colluding with institutions such as FDT to transfer $456 million in TUSD legal reserves in six transactions to a company, Aria Commodities DMCC, located in Dubai and wholly owned by Matthew Brittain's wife, Cecilia Brittain, without authorization, rather than to the well-regulated Cayman Islands registered fund ACFF. These funds were subsequently invested in global projects with extremely low liquidity, such as manufacturing plants, mining operations, shipping vessels, port infrastructure, and renewable energy enterprises.

Until Techteryx discovered that the Aria Group not only failed to pay the annual interest as agreed but also refused to respond to the redemption request.

In July 2023, Techteryx officially took over all operational rights of TUSD from TrueCoin and launched a comprehensive investigation into FDT with an independent professional team. At the same time, to prevent losses for TUSD holders, Techteryx urgently isolated 400 million TUSD to ensure that retail users can still redeem normally. However, the company itself is no longer able to fill the reserve gap.

In 2024, Sun Yuchen intervened and provided a $500 million loan to Techteryx, safeguarding the interests of all TUSD public holders. In September of the same year, the U.S. Securities and Exchange Commission (SEC) issued a public statement accusing TrueCoin of engaging in fraudulent activities during its continued operation of TUSD after acquiring it from Techteryx, stating that “TrueCoin profited through false representations of investment safety while exposing investors to significant, undisclosed risks.”

In February 2025, Techteryx applied to the Dubai International Financial Centre Court for a property injunction against AriaDMCC. After several months of multiple hearings, the court finally ruled on October 17 to indefinitely extend the global freezing order, marking the entry of the case regarding the misappropriation of reserve funds by the custodian into the judicial accountability stage.

Key details revealed

The details revealed in the court documents are shocking, exposing a carefully designed embezzlement network.

According to the DIFC court ruling, FDT and LegacyTrust CEO and Director Vincent Chok not only approved these illegal transfers but also colluded with partners of the Singapore investment advisory firm Finaport to receive secret illegal kickbacks exceeding HKD 100 million (approximately USD 15.5 million) through the company GlassDoor that he controlled, seriously violating Hong Kong trust law and the Independent Commission Against Corruption's regulations on anti-commercial bribery.

Matthew Brittain's testimony indicated that Vincent Chok requested to illegally transfer the reserve of 456 million USD to a private account at Aria DMCC, rather than to the regulated Cayman fund, precisely to “accelerate the receipt of secret kickbacks of up to 15 million USD.”

Matthew Brittain stated that after Aria DMCC received the misappropriated TUSD funds from FDT, a “transfer” operation was carried out at the end of 2022—subsequently creating a brand new ACFF fund subscription document, packaging the 456 million dollars received by Aria DMCC as “related loans” from the ACFF fund, and conducting a “return” in the form of transferring “assets” from Aria DMCC to the Cayman fund. This post-facto document forgery behavior is seen as clear evidence of fraud by the court.

The DIFC court clearly pointed out in the judgment that the obtained litigation documents support Techteryx's appeal: Vincent Chok, Matthew Brittain, and other involved parties “were fully aware of and jointly took fraudulent measures and harmed Techteryx.”

2. The Core of Stablecoins: The Cost and Value of Trust

This event, through complex technology and regulation, explains that the core of stablecoins always revolves around one word: trust.

It warns us that no matter how sophisticated the code is, it cannot replace systems and integrity. When future CEOs receive huge kickbacks and fund managers allocate reserves to illiquid assets, technology is powerless to stop it—only laws, regulations, and ethics can.

This also highlights Sun Yuchen's key role in this incident. He is not the main issuer of stablecoins; rather, TRON is more about circulation infrastructure. However, during the TUSD crisis, he pushed the case towards a judicial breakthrough: from cross-border lawsuits to court freeze orders, the case compelled regulators and the judiciary to face the institutional loopholes in reserve management.

In the crypto world, too many victims remain silent or settle privately, acquiescing to the jungle law of “code is law.” The public rights protection by Techteryx has set a precedent for legal accountability.

What the industry needs is such “imperfect promoters” rather than “perfect bystanders”. Perfect individuals often stop at moral high ground, while controversial actors may objectively promote the establishment of rules and the exposure of issues—this might be the realistic logic of the development of the cryptocurrency industry: between controversy and construction, there is a need for those who dare to take risks and drive change.

Ultimately, the cornerstone of stablecoins is not technology, but trust. The TUSD incident, costing $456 million, has led the industry to reassess the cost of trust. Transparent reserves, legal constraints, independent audits, and timely disclosures all come with costs, yet they are fundamental to the term “stable.”

As Sun Yuchen tweeted after the case was closed: “Justice may be delayed, but it will never be absent.” The second half of stablecoins belongs to the trust foundation built by regulation and the industry together.

III. Accelerate Legislation, the Trend of Stablecoin Regulation Becomes Stricter

Regulatory tightening has become a foregone conclusion. Major economies around the world are accelerating the legislative process for stablecoins.

The GENIUS Act, passed by the United States in 2025, serves as the first federal regulation on stablecoins, establishing a strict framework for “payment stablecoins”: requiring issuers to obtain regulatory approval, maintain 100% reserves (limited to cash and short-term government bonds), and disclose monthly. If this law takes effect earlier, the behavior of TUSD misappropriating reserves would clearly be illegal.

The European MiCA regulation will come into effect in 2024, stipulating that stablecoins with an issuance exceeding 5 million euros must hold an electronic money license, with reserves required to be segregated and managed, valued daily, and ensuring that they can be redeemed at face value at any time.

Hong Kong and Singapore will also launch similar systems in 2024, both emphasizing that reserves must consist of highly liquid low-risk assets, allowing users to redeem 1:1.

The recent ruling by the Dubai DIFC Courts regarding stablecoin custodians is particularly noteworthy, as the global freeze order they issued indicates that even in the Middle East, where regulation is relatively flexible, crypto disputes are facing strict judicial scrutiny—any individual or institution assisting AriaDMCC in violating the injunction could be found in contempt of court and face fines or even asset seizure, setting a precedent for other regions.

Technological innovation is also reconstructing the trust mechanism. On-chain reserve proof has gradually become an industry standard, with real-time verification of bank reserves through oracle networks. Some projects have achieved daily automatic updates, allowing users to verify at any time.

Smart contract custody achieves automated redemption through asset tokenization, where users destroy stablecoins to trigger the smart contract to release an equivalent amount of reserve tokens, technically eliminating the possibility of misappropriation.

Under dual pressure, the market is accelerating its reshuffle. In particular, traditional financial institutions are speeding up their entry, leveraging mature licenses and risk control systems, which not only enhances industry information disclosure but also poses competition to native crypto projects.

The market is also re-evaluating the paths of two types of stablecoins: the centralized model relies on institutional credit, with risks in custodial malfeasance; algorithmic stablecoins rely on collateral and arbitrage, with risks in death spirals during extreme market conditions.