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TUSD, it's time to get to know this new Binance favorite.

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In just six months, its market value has increased sixfold. What is the background of TUSD and why did Binance choose it?

Author: 0x26

Editor: Jack

In June 2023, with another issuance of TUSD (TrueUSD), its circulation has exceeded 3 billion, approaching the market value of BUSD, becoming the 5th largest stablecoin. In 2023, the issuance of TUSD increased by more than 200%, making it the only stablecoin with rapid growth in circulation during the bear market of cryptocurrency.

Due to different coordinate systems, the chart only represents trends. Data source: glassnode

It seems that everyone in the industry knows that TUSD's vigorous development in the bear market is inseparable from the promotion of Binance. Looking back at the development history of TUSD, we can find that TUSD, which seems to "get up early and catch up with the late gathering," has a different experience from most centralized stablecoins, including the mysterious departure of TrustToken's co-founder and CEO and the change of company ownership, as well as the original team's creation of unsecured lending protocol TrueFi and coin issuance, etc.

It seems that TUSD has become the new "official" stablecoin for Binance. But why did Binance choose TUSD, and who are the actual controllers and beneficiaries of TUSD? How will Binance prevent TUSD from becoming the next BUSD? With these questions in mind, we have conducted a detailed review of TUSD's history, tracing its entire development through clues and evidence.

Techteryx is who? The secret that cannot be revealed about TUSD

Looking back at the 6 years from 2018 to 2023, after experiencing the initial glory, the mid-term decline, followed by the change of ownership and going with the flow, TUSD has finally achieved its current status.

含着金钥匙出生

translates to

Born with a golden key in the mouth

in English.

Although TrustToken's TUSD (TrueUSD) has a weaker presence in DeFi Summer, it was actually launched earlier than USDC (USD Coin), USDP (Pax Dollar), and BUSD. According to the official website, TUSD was launched in April 2018 and was the first regulated stablecoin operated by a regulated operator.

When TrustToken was founded in 2018, it received a total of $20 million in investments, including a16z and Founders Fund, which have withstood market fluctuations, as well as renowned Chinese institution GGV Capital, market-famous market makers Jump Trading Capital and BlockTower Capital, and the then-popular Danhua Capital and ZhenFund in the cryptocurrency industry.

As early as the year of its launch, its circulation exceeded 200 million US dollars. However, in January 2020, its circulation dropped to about 150 million US dollars, surpassed by USDC's 500 million US dollars and USDP's 200 million US dollars. Although born with a golden key and quickly listed on many mainstream trading platforms such as Binance, Bittrex, and Upbit, TUSD was not successful in terms of circulation, number of trading pairs, and trading volume in its early years.

Mysterious Change of Ownership

According to Linkedin profile, Jai An, co-founder and CEO of TrustToken, the company behind TUSD, resigned in July 2020. Since then, he has not updated his profile and it is difficult to find information about the former TUSD CEO on various online platforms.

Coincidentally, starting in July 2020, TUSD, which had not been issued for a long time, began to increase its issuance intensively. Soon after, the issuance volume surpassed the previous highest value, reaching 500 million US dollars.

Data source: glassnode

TrustToken officially announced in December 2020 that it will transfer ownership of TUSD to Asian consortium Techteryx. TUSD will have independent financial and operational resources separate from TrustToken Inc, while the TrustToken team will continue to manage product operations, compliance, and banking relationships. TUSD will continue to exist on the Ethereum blockchain and support the Binance blockchain, and will soon be natively introduced to Tron and other chains.

This means that at the public level, the official handover has been completed.

Another co-founder and CTO, Rafael Cosman, became the CEO of TrustToken in the announcement and continued until the Archblock era. At the same time, TUSD's official Medium account moved to a new account, and all articles previously released by TUSD are now retained in the TrueFi account. That's why clicking on some early announcements now redirects to the TrueFi page.

It should be from this moment on that the identity of Techteryx, an Asian consortium, and the true owner of TUSD became confusing.

After TUSD announced a change of ownership, it sparked intense discussions within the Makerdao community about the risks of TUSD, where we received "very detailed invalid information" from the official source. Techteryx is a large joint venture based in Hong Kong, Singapore, Guangzhou, Shenzhen, and Beijing, led by Jennifer Jiang (the largest owner), who has a strong background in traditional industries and has led the acquisition of more than a dozen companies...

Adam is like the little boy in "The Emperor's New Clothes", speaking out what many people want to say. However, the subsequent development of the situation is far from the fairy tale, as he received a warning from the official TUSD.

When responding to the tweet about "but they just won't admit it," Adma stated that in fact, when taking over businesses worth more than $1 billion, most legitimate business groups want the public to know who they are - rather than hiding it. This is in reference to a tweet.

Crypto has always been the Wild West, and under various internal and external factors, many Chinese companies commonly use offshore companies, "white gloves," and outsourcing companies. Just like how Justin Sun is currently only a consultant for Huobi.

TUSD and TureFi, brothers from the same origin but different lineage

In fact, CZ has already clarified that TrueFi has nothing to do with TUSD. However, by clarifying the timeline of events related to TrueFi, we can better understand the relationship between the original TUSD team, investors, and the acquiring party Techteryx:

In December, TrustToken officially announced the transfer of ownership of TUSD.

In August 2021, TrustToken announced that it had raised $12.5 million by selling its native token TRU through Blocktower as the lead investor, with a16z and Alameda Research also participating.

In March 2022, TrustToken added two senior executives, Bill Wolf, a veteran of Wall Street, as Chief Investment Officer, and Ryan Christensen, a senior product manager, as Chief Product Officer.

In September of the same year, TrustToken was renamed Archblock, with Ryan Christensen, who had joined earlier, promoted to CEO. Former CEO Rafael Cosman became a board member and advisor, and founded the AI company Protogon Research in 2023.

Combining with the timeline mentioned earlier, we can clearly see that TUSD and TrueFi have a same origin but different ownership relationship from the beginning. From the TrustToken team selling all the ownership of TUSD, to creating TrueFi based on TUSD and financing the issuance of tokens, to establishing a new company, and possibly introducing well-backgrounded executives for the founder's exit. A series of covert and delicate chain operations are breathtaking. Without careful sorting, it is difficult to distinguish the relationship between the two parties. This is likely the reason why every TUSD issuance in the past has caused a surge in the TrueFi token TRU.

Coldness and Ambiguity, Why Did Binance Choose TUSD?

Binance is a trading platform that supported TUSD early on. In May 2018, it planned to launch TUSD and listed it with BTC, ETH, and BNB trading pairs. However, perhaps due to liquidity issues, Binance ultimately delayed the listing of TUSD by 4 days.

Later in 2019, Binance gradually listed some TUSD trading pairs for projects with high market capitalization and good liquidity. However, Binance may still be in the stage of seeking reliable stablecoins at this time, as stablecoins other than TUSD, such as USDC and PAX, were also listed. Although the announcement mentioned TUSD extensively, it is not unique among many stablecoins.

In order to fully understand the changes in the relationship between Binance and TUSD, we have collected the English announcements released by Binance regarding TUSD.

TUSD's "good days" on Binance came to a temporary end in October 2019. Since then, Binance has had almost no new TUSD trading pairs. From April to October 2020, for a period of 7 months, TUSD on Binance only had announcements of being removed from trading pairs. After that, TUSD became the least visible stablecoin on Binance. Even in 2022, Binance continues to delist TUSD trading pairs.

In contrast to the continuous decline of TUSD, Binance and Paxos Trust Co., a cryptocurrency financial institution, launched a USD-backed stablecoin called Binance USD (BUSD) in September 2019.

Transfer

The circulation of BUSD surpassed TUSD at the beginning of 2020 and in September, with the help of BSC (now BNB Chain), it left USDP of PAX behind, becoming the leader. At its peak, Binance followed FTX's strategy and automatically converted USDC, USDP, and TUSD into BUSD, achieving compliance and unifying stablecoins on Binance. It can be said that during that time, the only recognized centralized stablecoins were USDT, USDC, and BUSD.

Starting from September 2020, the market share of BUSD represented by blue has been rapidly increasing. Data source: Coin Metrics

However, on February 13, 2023, the New York State Department of Financial Services (NYDFS) ordered Paxos to stop issuing more BUSD. The fate of TUSD has turned around.

NYDFS emphasized that Paxos is authorized to issue BUSD on the Ethereum blockchain, but the department has not authorized Binance-Peg BUSD on any blockchain. Paxos responded that as of February 21, Paxos will stop issuing new BUSD Tokens in accordance with NYDFS's instructions and work closely with them. BUSD will continue to receive full support from Paxos and can be redeemed at least until February 2024.

Later on, BUSD, which once had a market value of up to 22 billion US dollars, gradually faded away from the historical stage.

At that time, few people would have thought that Binance would choose TUSD. This is because at that time, the market value of USDT was 69 billion US dollars, the market value of USDC was 41 billion US dollars, and MakerDAO's DAI had 5 billion US dollars. The market value of TUSD was only 900 million US dollars, even less than the native stablecoin FRAX of Frax Finance, which had a market value of 1 billion US dollars.

However, the circulation is small, and it seems to be the best solution at Binance. Starting from September 2019, TUSD began to be "frozen" by Binance. During the 5 months from September 2022 to March 2023, TUSD even disappeared completely from Binance's announcements. Over the past five years, Binance has only released 62 announcements for TUSD.

From March to June 2023, Binance released 41 announcements related to TUSD within 3 months. Since then, the circulating market value of TUSD has increased by 220%.

What did Binance do after choosing TUSD?

In order to protect their own rights and the interests of BUSD holders, Binance first chose to increase stablecoin spot trading pairs on March 11th, offering fee discounts and stopping automatic conversion of stablecoins. At the same time, BNB, ETH, and TUSD trading pairs have zero trading fees. One detail in the announcement is that the window for automatic 1:1 conversion of BUSD to TUSD is nearly two weeks longer than that of USDC and USDP, indicating the closeness of their relationship.

In addition, Binance will also add TUSD trading pairs for popular trading currencies and enable isolated margin trading for some TUSD trading pairs. Taking RDNT, which will be launched in Binance Innovation Zone on March 31, as an example, the three trading pairs are BTC, USDT, and TUSD.

If the above strategies are just appetizers, then Launchpool opening TUSD Pool and BTC/TUSD trading pair with zero fees can be considered as a sumptuous feast prepared by Binance for TUSD. It is worth noting that prior to this, only BNB and BUSD were regulars on Launchpool, and since March, all of Binance's Launchpools have only included BNB and TUSD. This shows the importance of TUSD on Binance.

Binance announced on March 15th that it will stop the zero fee activity for BTC in all trading pairs, and only BTC/TUSD will enjoy the activity of zero fees for placing and taking orders. This strong incentive has led the BTC/TUSD trading pair to surpass the BTC/USDT trading pair, becoming the largest trading pair in terms of trading volume on Binance.

TUSD's Hidden Concerns

Although Binance supports TUSD like BUSD, the foundation of TUSD, which has been running all the way, is still somewhat unstable.

When TUSD did not have the support of Binance Launchpool, its exchange rate with USDT was negative for a long time. Moreover, it often became unanchored in the Curve pool, with a share of nearly 70% in the 3Pool and TUSD liquidity pools.

TUSD has a serious imbalance in the Curve 3Pool/TUSD liquidity pool

Apart from the Tron and Ethereum chains, the issuance of TUSD is very limited. Besides its previous use in TruFi and USDD, TUSD, which had few use cases during DeFi Summer, is now even more stretched.

Although Binance has launched a zero-fee promotion for TUSD trading, the trading volume for other pairs is dismal except for BTC. Even with zero-fee orders for ETH/TUSD, the trading volume is far lower than that of USDT pairs. Outside of Binance, there is even less support for TUSD pairs on other trading platforms. OKX does not have TUSD pairs, and Huobi has only listed USDT and USDD pairs.

Not only is there a shortage of use cases, but the issue of TUSD's reserve of over 3 billion dollars seems to be a major concern in the community.

TUSD has always claimed that Chainlink provides Proof of Reserves for TUSD, but Chainlink's displayed data is obtained from a company called The Network Firm, which conducts regular reviews of TrustToken's custodial bank accounts. It is worth noting that some members of The Network Firm come from Armanino, which audited FTX in 2020 and 2021. Previously, TUSD's Proof of Reserves was also audited by Armanino, as stated in this article.

Not only is the storage of data proven, but also the custodian institution Prime Trust, which holds the reserve for TUSD, is deeply troubled by bankruptcy.

On June 28th, the Financial Institutions Division (FID) of Nevada's Department of Business and Industry filed a petition with the Eighth Judicial District Court of Nevada, requesting the appointment of a receiver to take over the daily operations of the cryptocurrency custodian Prime Trust and investigate all of its financial conditions.

The file display of FID shows that Prime Trust lost access to the old wallet as early as 2021 and used customers' assets to repurchase cryptocurrencies. Even TUSD officials have repeatedly stated through various channels that they have suspended coin minting through Prime Trust.

Why TUSD?

Despite the existence of multiple potential risks, why did Binance still choose TUSD?

Regulatory issues are an unavoidable aspect. By reviewing the development history of BUSD, we may be able to find some clues. In September 2019, Binance chose to collaborate with Paxos, an experienced entity that acted as the issuer of BUSD on Ethereum. BUSD is an ERC-20 token issued on Ethereum, and the BUSD reserve is held in Paxos' US bank account.

But both BSC (now BNB Chain) and BUSD have their successes and failures. One reason for the regulatory accusations against BUSD is due to this. The issuance of BUSD by Paxos was authorized by NYDFS, but only on the Ethereum network. The issuance of BUSD on the BSC network is a completely different matter.

Although Binance's partnership with Paxos is well-known because of BUSD, as early as June of the same year, Binance had already announced a partnership with TrustToken. As the CEO at the time, Jai An stated that Binance users could seamlessly mint and redeem TUSD. The partnership with Binance will make it easier for users to enter and exit the cryptocurrency market.

It should be noted that in June 2019, the issuance of TUSD was higher than that of PAX. Although it is unclear why Binance ultimately chose Paxos, it can be said that Binance's fate with TUSD began at that time. Not to mention the "Asian heritage" that TUSD now possesses, which seems to be extremely compatible with Binance.

As for Binance, which currently sits at the top of the industry, it has chosen not to enter the market with a high-profile approach, likely due to the cautionary tale of BUSD.

Although there was once a joint challenge from USDC and BUSD supported by Binance, it is now a thing of the past. USDT continues to maintain its dominant position in the centralized stablecoin field. Its liquidity, trading volume, and number of trading pairs are all overwhelming. Its parent company, Tether, had a net profit of $1.48 billion in the first quarter of 2023 alone.

USDT, which sits steadily on the sidelines, not only does not need support, but also has been repeatedly fined by regulatory agencies due to the long-standing problem of opaque reserves that has been criticized by many. USDT, which has been plagued by regulatory issues, was previously unable to automatically exchange with compliant stablecoins on many trading platforms at a 1:1 ratio.

Thanks to FTX and DeFi, USDC (Circle) achieved full development during the last bull market. Not only did it sit firmly in the position of the second largest stablecoin, but it also raised a total of $400 million in funding from traditional financial giants such as BlackRock and Fidelity in 2021. However, whether it is the close relationship with FTX as a small shareholder, or the previous Bloomberg report that Circle reported to NYDFS in 2022 that "Binance's reserves are insufficient to support assets such as BUSD", coupled with Binance US's development being hindered in the United States, may make Binance hesitant to adopt USDC on a large scale.

Looking at TUSD, whether it is from its "Asian heritage", long history, compliance level, or infrastructure construction, it is a unique existence among the choices available. In addition, the relationship between Binance and Tron is not as bad as many people imagine. Not only did Tron conduct an ICO on Binance, but in 2019, after experiencing regulation, Binance restarted Launchpad, igniting the market with strong profit-making effects. Since announcing the restart of Launchpad, the price of BNB has risen from $6 to nearly $40, an increase of over 500%. The first project on Launchpad at that time was BitTorrent, which was acquired by Tron founder Justin Sun in 2018.

The important thing is that under regulatory pressure, Binance may need a trustworthy and "stable" stablecoin partner from a reasonable and legal third-party perspective.