Adam Cochran, a marketing expert known for his viral threads on Twitter, recently raised questions about stablecoin TrueUSD (TUSD) for its doubtful claims. TUSD has been making headlines due to its banking partner, Prime Trust, receiving a cease-and-desist order from Nevada financial regulators who alleged that the company was insolvent.
Prime Trust, a Nevada-based crypto custodian, was compelled to halt all deposits of fiat and digital assets by regulatory authorities on June 21. The allegations were based on Prime Trust’s failure to safeguard assets under its custody and fulfill clients’ withdrawals.
Cochran tweeted that the auditor attesting to the TUSD audits was the former FTX auditor, now rebranded as The Network Firm. He elaborated that TUSD is a stablecoin that hasn’t disclosed its banking partner and one of its known partners (Prime Trust) is already bankrupt. Additionally, not only does TUSD have audits from a former FTX auditor, but it is also attested by an oracle run only by that auditor.
In a lengthy Twitter thread, Cochran also pointed out that Prime Trust has $150 million in liabilities, making it impossible for even the owed liabilities to cover the amount of TUSD. On the other hand, TUSD has consistently reiterated that it has “no exposure” to Prime Trust and remains unaffected by the situation.
The stablecoin issuer posted on June 23 that it has maintained “multiple rails for minting and redemption.” Despite claiming they have multiple rails, the same day at a later time, the TUSD team sent emails to users saying mint and redeem were paused due to Prime Trust, tweeted Cochran.
Cochran further explained in a tweet that Prime Trust’s losses could be traced back to 2021, suggesting that even if TUSD wanted to switch to new providers, they would still likely have had some exposure.
Prime Trust's losses go back to 2021 – and so even if TUSD had wanted to move to new providers, they'd still likely have had some level of exposure.https://t.co/Kkcclw7gDO
— Adam Cochran (adamscochran.eth) (@adamscochran) June 27, 2023
Cochran also noted that TUSD’s growth had been steady with normal patterns of minting and redemption until two massive prints of $1 billion each were made from one address directly into Binance. On March 29, 2023, Binance listed several trading pairs involving TUSD and introduced a zero-maker fee promotion for TUSD spot and margin trading pairs. Additionally, TUSD became the token for farming new launchpad airdrops on the exchange.
According to Cochran, contrary to TUSD claims, multiple people tried to redeem and instead got their token returned on chain, while others were sent USDT instead of getting USD back. He cited the statement of a former employee of TrustToken (the creators of TUSD) who had proof that users were unable to redeem their tokens and were instructed to send them to Binance to sell.
Cochran offered a $1,000 bounty to anyone who could prove they could mint or redeem TUSD. Only one person came forward and provided a transaction from 10 days before the pause, which was a Binance withdrawal. Cochran also requested TUSD to substantiate their claims of having multiple rails for minting and redemption but received an email with standard articles from their website instead.
Adding to the doubts surrounding TUSD’s claims, Cochran pointed out that despite promises of TUSD redeemability, nobody has been able to redeem it. Cochran criticized Binance for continuing to promote and accept TUSD as collateral, as it should prioritize protecting users in such circumstances.
