Crypto Critics' Corner

,

Episode 122 – Justin Sun Owns TrueUSD

Justin Sun and TrueUSD… Again – Crypto Critics' Corner

Today Bennett Tomlin and Cas Piancey are discussing the weird shenanigans ongoing with the stablecoin TrueUSD (TUSD) and the numerous platforms and exchanges that Justin Sun has purchased over the years. This episode was recorded on Wednesday, July 26th, 2023.

Cas Piancey and Bennett Tomlin discuss TrueUSD, Huobi, Poloniex and Justin Sun trying to keep his empire solvent.

This episode was recorded on July 26th, 2023.

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00:00:05:02 - 00:00:11:16
Cas Piancey
Welcome back, everyone. I am Cas Piancey. I'm joined, as usual, by my partner in crime, Mr. Bennett Tomlin. How are you today?

00:00:11:17 - 00:00:13:09
Bennett Tomlin
I'm doing pretty good. How are you Cas?

00:00:13:10 - 00:00:37:24
Cas Piancey
Doing good. We are going to be talking about I feel like this is just a topic that never goes away as much as I want it to. Our boy Justin Sun and his stablecoin TrueUSD. I guess I shouldn't be saying his stablecoin but that's what we all know it as at this point. But yeah, we're going to get into all the weird shit that's been going on with it.

00:00:37:24 - 00:00:51:05
Cas Piancey
It's been just a strange even we were talking about it last time with the DataFinnovation Boys. There's been some weird updates, the lawsuit, etc. So. So let's start. Let's start there. Let's start with the lawsuit.

00:00:51:07 - 00:01:16:04
Bennett Tomlin
Sure. So just for some context, last time we talked about this with Jonathan Reiter and Patrick Tan, the world, or at least the knowledgeable connected world, assumed TrueUSD was connected to Justin Sun. We knew Justin Sun was a partner market maker, but we assumed that since December 2020, when Techteryx bought the brand name, that Justin Sun has owned it.

00:01:16:07 - 00:01:58:17
Bennett Tomlin
But that was not publicly known in the interim. Since we did that last episode, a couple of things have been revealed. One of those things, as you mentioned, is that former TrustToken's CEO Daniel Jaiyong An is suing Archblock, formerly TrustToken, and in the course of that lawsuit includes some conversations, negotiations and information about a period in 2020 when the Tron Foundation was trying to purchase TrueUSD in a in a deal that was being negotiated by Can Sun, a lawyer and Justin Sun and the Tron Foundation to purchase TrueUSD.

00:01:58:24 - 00:02:34:17
Bennett Tomlin
So that came out. The other piece of information just before we really get into this conversation is Adam Cochran, a venture capitalist, did some digging into TrueUSD and identified a bunch of other links that show up like it seems. Jennifer Jiang may also be on some of the BitTorrent related companies and stuff like that and has all these other preexisting connections to Justin Sun, which really kind of undercuts their December 2020 statement that Justin Sun has no involvement at all.

00:02:34:20 - 00:02:38:06
Bennett Tomlin
So those were like the two pieces of information that have come out. They've taken it from Justin Sun.

00:02:38:06 - 00:03:05:19
Cas Piancey
So I just want us to hit the I want us to hit the brakes here for a second. I just want us to hit the brakes, throw the car into reverse, because I think we've we've kind of jumped into a lot here. I know we've talked about TrueUSD, we've talked about these stablecoins before, and I know that a stablecoin as far as complexity goes, it can be they can be very complex and they can be not complex TrueUSD at what its base value is, but what it's supposed to be.

00:03:05:21 - 00:03:30:22
Cas Piancey
It's supposed to be one of these simpler stablecoins. So that isn't what I want to get into us reversing and discussing. I do want us to talk about TrueFi. I want us to talk about our Archblock. I want us to talk about these entities that have been and Techteryx. I want us to talk about these entities that have been popping up, doing one or two things, disappearing, rebranding, renaming.

00:03:30:29 - 00:03:49:15
Cas Piancey
These are the corporate shenanigans that we're used to because we've been dealing with this with tether and these other entities forever. But let's talk about it. So what was TRU? What was TrueFi? What was TrueFi or what is TrueFi? What was the TrustToken ecosystem? What was this lending program, etc.?

00:03:49:16 - 00:04:15:15
Bennett Tomlin
Yeah, so this is a little complicated, but a US based company called TrustLabs was started back in like 2017 to start doing tokenized assets, focusing most of their effort on Stablecoins. So they had a couple of other efforts. They eventually launched a variety stablecoins TrueUSD, TrueAUD, TrueHKD, and TrueGBP so British pound Hong Kong dollar and probably Euro if I didn't say that already.

00:04:15:17 - 00:05:00:29
Bennett Tomlin
Then they started launching some other things. They did a fundraise with their Tru token where Alameda Research was a lead investor, and the Tru token was meant to govern the TrueFi lending platform, which was a lending platform designed for uncollateralized loans of primarily stablecoins to people extended through this platform. Alameda Research, who again as we mentioned, was one of the lead investors in the Tru token, was extended millions of dollars of uncollateralized loans through this platform from an entity called TrustTrading, which is a wholly owned subsidiary of Archblock, which is what TrustToken rebranded to after they sold off TrueUSD and all that.

00:05:01:02 - 00:05:28:07
Bennett Tomlin
Besides that, there's yeah. And so that's Archblock. That's true for Alameda Research as we mentioned was a lead investor in Tru token, was getting loans from TrueFi. According to ChainArgos research was like the largest minter and redeemer of TrueUSD, followed by I think Justin Sun was in second place. And so yeah, that was broadly like the set of entities we're looking at here.

00:05:28:09 - 00:06:06:00
Bennett Tomlin
We should also mention Techteryx, right? Techteryx, which is nominally an Asian Asia based conglomerate that seems like it's actually incorporated out of the British Virgin Islands where they, which was used to purchase initially just kind of the name TrueUSD and Archblock was still in charge of a lot of the administration. A few months ago, Protos reported that the private keys and the rest of the stuff that Archblock had been managing had been transferred over to Techteryx, and shortly after we published that TrueUSD came out and announced their international transition.

00:06:06:07 - 00:06:16:18
Bennett Tomlin
And so now TrueUSD is kind of more fully separate from Archblock, which used to be TrustToken and seems to be basically wholly and fully controlled by Justin Sun.

00:06:16:18 - 00:06:44:19
Cas Piancey
Yeah, that's right. We don't have any like, I don't think there's any way to fully prove it at this point. So, you know, allegedly there's the word allegedly Techteryx and TrueUSD and the rest of this stuff is now completely controlled by Justin Sun alleged. But there's also been some weird shenanigans with that. I mean in terms of its collateral, in terms of where its collateral is.

00:06:44:19 - 00:06:50:18
Cas Piancey
I think we got into it with the boys last time. So we don't necessarily need to get into the depths of that.

00:06:50:18 - 00:07:11:11
Bennett Tomlin
So but so sorry to interrupt you, but you bring that up and I didn't think we had to get into it, but there was a little bit of a note in Daniel's lawsuit that makes me think we need to bring it up, because one of the things we talked about is how the collateral being held at FlowBank is no longer appropriately being held in escrow and instead being held directly by agents of Techteryx or whatever.

00:07:11:14 - 00:07:42:11
Bennett Tomlin
What was mentioned in Daniel's lawsuit is that Techteryx is currently trying to or TrustToken or Archblock. There's currently an attempted restructuring of some of these entities that will put them in Switzerland. And Daniel is opposed to that restructuring, believing it unfairly deprives him of wealth that is supposed to be his. But so that was kind of the interesting wrinkle to me is that we saw all this money moved to Switzerland in this account that was not appropriately escrowed.

00:07:42:18 - 00:07:48:00
Bennett Tomlin
And then we hear that there's an attempted restructuring going on in that same jurisdiction.

00:07:48:06 - 00:07:53:26
Cas Piancey
I want to point out that this lawsuit was filed pro se.

00:07:53:29 - 00:07:55:28
Bennett Tomlin
And it reads like it is.

00:07:56:01 - 00:08:30:09
Cas Piancey
And it reads like it, which is it's an important point because for anyone who's not aware, that means that there's no lawyer involved in this, that this guy is is doing this lawsuit on his own without the help of a lawyer. And yeah, that it doesn't stand much of a chance is basically what that means because generally whether you're defending yourself in a court of law or you are suing someone else in a court of law, if you're doing it on your own with the help, without the help of legal assistance, you're probably not going to get very far.

00:08:30:11 - 00:08:49:23
Cas Piancey
And so, yeah, we can presume as much. Also because this guy claims that he's owed $96 million and you would be able to get a lawyer to agree to terms if that if they actually thought you had a chance of seeing that $96 million. It doesn't sound like any lawyer thought he had a chance of seeing that $96 million.

00:08:49:26 - 00:08:51:06
Bennett Tomlin
So and we should also.

00:08:51:06 - 00:08:53:29
Cas Piancey
I just wanted to ask a caveat to the to the lawsuit.

00:08:53:29 - 00:09:08:05
Bennett Tomlin
And this is kind of a countersuit because Archblock formerly TrustToken has had a separate lawsuit against him for deleting their internal Slack when he was voted out of the CEO position.

00:09:08:08 - 00:09:25:29
Cas Piancey
And that's been ongoing for over like two years now. Yes, that is a lengthy I guess he's been pushing for a lot of discovery information and and vice versa. And yeah, it's been a slow process, slow legal wrangling. Yeah, a lot of weird claims and.

00:09:26:02 - 00:09:49:18
Bennett Tomlin
Yeah, so I think the most important claims we should take out of it are not some of the ones about behavior of certain executives that were given without evidence. The part that seems more plausible to me are the parts where we can see some of the messages regarding these negotiations and some of the names mentioned that has a lot more credence to it and some of the other allegations contained in it.

00:09:49:18 - 00:10:02:18
Cas Piancey
It doesn't. It doesn't to me. So there there I believe Bennett is one of the things he's speaking about, for instance, is that there is a text message exchange with Justin Sun. It's hard to call it even an exchange because it's almost all.

00:10:02:20 - 00:10:02:29
Bennett Tomlin
One-sided.

00:10:03:28 - 00:10:31:12
Cas Piancey
Daniel sending messages to Justin Sun Which leads me to believe he was sending these messages knowing full well that he was going to be screenshotted in this conversation because he was like, okay, I'm going to look good right here. Whereas he doesn't show us the entirety of this conversation. When it started, what was said, what the hopes and and aspirations were for this, for this take over.

00:10:31:14 - 00:10:36:06
Cas Piancey
All he shows is him saying to Justin that he thinks that's a bad idea. Yeah. Grain of salt.

00:10:36:09 - 00:10:57:15
Bennett Tomlin
There. There is one other thing I want to highlight, though, is he does include the name of a lawyer who is supposedly helping Justin's son negotiate this and point specifically to a lawyer named Can Sun, which we don't know if there's any relation to Justin there. It's a relatively common name. So we don't want to jump to too many assumptions.

00:10:57:18 - 00:11:27:06
Bennett Tomlin
But this lawyer is interesting because they worked for Fenwick & West, which is a firm that represented the BitTorrent Foundation in 2018 or 2019, when the Tron Foundation was acquiring it and then Can Sun left Fenwick and West, where they were working with Daniel Friedberg to go be a general counsel at FTX, underneath Daniel Friedberg. And so that name was an interesting.

00:11:27:06 - 00:11:30:18
Cas Piancey
The best career decision. Can we just say? Well.

00:11:30:20 - 00:11:57:23
Bennett Tomlin
I think it is telling in the context of some of the other Alameda research connections I alluded to before. Right? Alameda Research was the largest or was a lead Tru token investor was getting like the largest loans out of anyone on the TrueFi platform was the largest issuer and redeemer of TrueUSD like that is important context when we're considering the this lawyers trajectory.

00:11:57:26 - 00:12:20:14
Cas Piancey
Sure sure that we've gone into their escapades before. We urge people I urge anyone to listen to our episode with Jason Bral where we talk about the some of the lawyers that are now getting mentioned, a lot and we were talking about it years before all of this nonsense. These guys have been involved in crypto for a while, I think.

00:12:20:14 - 00:13:03:03
Cas Piancey
I mean, I remember when you and I were first getting into cryptocurrency, so many people, so many of the people who were putting a lot of money into it were poker. But like it was pretty commonplace. I, I don't know if there's that same association these days, but it certainly was a big, a big deal before. I know now that with Rollbit getting such a big platform from a bunch of individuals on crypto currency Twitter that perhaps we're seeing this kind of poker gaming, uh, illegal gambling stuff getting popular again and we'll see where that goes.

00:13:03:03 - 00:13:06:16
Cas Piancey
But for a while there it seemed like there was at least a break.

00:13:06:23 - 00:13:27:03
Bennett Tomlin
Yeah. So I think there's a couple of dynamics there, and I think there's a reason it's coming back to. You'll remember when we had Jason on to talk about he talked about like pre Black Friday in the lead up where there was starting to be more and more pressure on some of these poker sites, it became harder and harder to deposit and withdraw money from these sites.

00:13:27:05 - 00:13:37:04
Bennett Tomlin
And so the poker players who were still using them got comfortable using more and more unconventional methods of moving money in order to continue having this opportunity.

00:13:37:04 - 00:13:41:23
Cas Piancey
He mentioned jewelry, exactly like jewelry being a very common thing.

00:13:41:23 - 00:14:13:15
Bennett Tomlin
Which is like the same way that Backpage was doing it for a while for some of their stuff. And so what's interesting to me is that I think this allowed them to be well positioned to take advantage of crypto early on because they were familiar with many of these unconventional rails that crypto companies began to rely on as crypto companies began to get banked at Signature and Silvergate and everywhere else, some of that barrier to entry decreased and it became easier for some of these people to use it.

00:14:13:18 - 00:14:28:23
Bennett Tomlin
I think as we've seen the deep banking of crypto, it will become like the proportion of people like that poker players and stuff like that will again kind of shift more towards overrepresentation as some of the barriers to trading crypto go up.

00:14:28:26 - 00:14:53:24
Cas Piancey
Okay. Yeah, that's an interesting, interesting perspective I hadn't been thinking about. We obviously had to continue the continuous line of these lawyers, the legal, the legal representation for for major cryptocurrency exchanges and Yeah. And other entities have has for some reason always skewed toward the same legal representation of the worst outfits in the poker world back in the day.

00:14:54:01 - 00:15:35:07
Cas Piancey
So I don't know what that means. I'm just saying that they were hiring the legal representation for the worst companies in poker back in the day, whatever, whatever that means. But anyway, so there's some other stuff though, in regard to Justin Sun outside of just this lawsuit, one of the big things that's been that has been getting a lot of attention, actually, not just you and you know, and the DataFinnovation boys, but but other people, too, have been focused on this wrapped Bitcoin, which seems to have vanished into thin air, which is like pretty sure something Bitcoin can't can't do.

00:15:35:07 - 00:15:38:20
Cas Piancey
Right. Like it can't just vanish off the blockchain. How does that happen?

00:15:38:22 - 00:15:42:07
Bennett Tomlin
There was a boating accident. Um, yeah. So what were.

00:15:42:09 - 00:15:43:25
Cas Piancey
On the blockchain?

00:15:43:28 - 00:16:04:14
Bennett Tomlin
There are a couple versions of wrapped Bitcoin on Tron. There's one very small one that's done by like the same people who did wrapped Bitcoin on Ethereum custody is done by Bitgo and it's very easy to find the addresses for that one, but no one uses it. The one everyone uses is a product that was initially offered by Poloniex.

00:16:04:16 - 00:16:26:00
Bennett Tomlin
Poloniex, as we've mentioned on here before, seems to have been acquired by Justin Sun. We’ll say seems to be since he wants to pretend he didn't do it, that one you know one can find the backing for I've gone looking I have not been able to find the backing I purchase. Asked Poloniex where the backing is, and they said You're not a customer.

00:16:26:05 - 00:16:49:16
Bennett Tomlin
We can't tell you that. And no one else seems to be able to find it. And that is not great because, well, it's thousands and thousands of bitcoin, including a significant portion of the Bitcoin reserves at who will be like customer reserves that are supposed to be allocated for customers are not in regular Bitcoin like you would expect.

00:16:49:18 - 00:17:04:05
Bennett Tomlin
They're in this wrapped bitcoin that is from Poloniex where no one can find where the tokens are custody besides will be. You see a bunch of them go to SunSwap to JustLend those protocols. I know.

00:17:04:05 - 00:17:29:28
Cas Piancey
That. Sorry, sorry, sorry. So for anyone who's. Yeah, we'll pause again here. Justin Sun is so self-obsessed that everything he creates has to in some way like have his name associated with it. Obviously, just to lend is as in Justin Sun, Justin, sun lend, JustLend. And then there's what was its SunSwap. SunSwap.

00:17:29:28 - 00:17:54:19
Bennett Tomlin
Yes, you can swap on Sun’s personal dex. And so yeah, there are thousands of Bitcoin that are supposedly on the Tron network where no one can find the corresponding bitcoins on the Bitcoin network, the entity that's supposed to be custodian them. And managing these swaps won't tell anyone where they're stored. And that same entity sorry, that same entity promised back in November that they would release a proof of reserves shortly.

00:17:54:21 - 00:17:59:06
Bennett Tomlin
They have yet to release any kind of like Merkle proof of reserves.

00:17:59:08 - 00:17:59:23
Cas Piancey
Okay.

00:17:59:23 - 00:18:07:28
Bennett Tomlin
And when you asked them about, they said they're still working on it. We asked them why eight months wasn't enough time to finish it, and they just said we're still working on it.

00:18:07:29 - 00:18:22:01
Cas Piancey
This brings around to a larger point that I'm sure we've touched on before, but this this is something I've noticed a lot more lately, which is that when when were these wrapped Bitcoin originally like created.

00:18:22:06 - 00:18:23:18
Bennett Tomlin
Like 2018.

00:18:23:21 - 00:18:29:17
Cas Piancey
Okay, this speaks to. So I think one of the ongoing lies that.

00:18:29:21 - 00:18:30:16
Bennett Tomlin
2020.

00:18:30:18 - 00:19:03:10
Cas Piancey
2020. Okay. Nonetheless, three years. So this speaks to me, to me, this speaks to there's this consistent narrative that the blockchain and cryptocurrency provides transparency because you can, you can go on these scanning, you can use scanning tools, you can use breadcrumbs, you can use, you can use all of these things to try to get get information that you wouldn't be able to otherwise, for instance, from the Federal Reserve or whatever they want to say.

00:19:03:12 - 00:19:12:01
Cas Piancey
Unfortunately, what you just what you just proved is that this dude did this thing in 2018. No one knows where these coins are now.

00:19:12:05 - 00:19:12:14
Bennett Tomlin
2020

00:19:12:21 - 00:19:34:04
Cas Piancey
however long they've been gone. If they ever were wrapped in the first place, like no one knows, no one knows and that it's there isn't the what transparency. This is obfuscation. This is this is creating extra steps that people just don't fucking care about. Nobody's going to bother checking to ensure that the wrap it quite like nobody fucking cared.

00:19:34:11 - 00:19:59:03
Cas Piancey
Nobody cared in 2020. Like hardly anyone cares, right? Like now people care because they're like, Dude, are there just millions of dollars just up and walked away? What? What happened? Right. But like, if Protos hadn't done this and people hadn't been asking some questions, eventually who knows? Right? And I and I just it just bugs me because there's this narrative of it being so transparent.

00:19:59:03 - 00:20:14:29
Cas Piancey
And the reality is, where's the transparency? This is obsfucation. It's an extra layer to trying to even if you say, like, we proved it, there's no Bitcoin here. They just go, Oh, well, we're auditing it and figuring it out. We'll get back to you like, what does that even mean?

00:20:14:29 - 00:20:30:00
Bennett Tomlin
Where are they? Just give me an address. Put them in an address. Give me the address. Then we can all say, Hey, that address has them. And if someone moves them, we can go. Why the fuck are you moving? The ones that are supposed to be in that address, but they don't want to do that. And I think personally, yeah, yeah.

00:20:30:00 - 00:20:54:07
Bennett Tomlin
I think kind of what we're getting at here, like through like the reason this to me is connected to TrueUSD beyond just the fact that it's just is it points towards kind of this pattern of what you're talking about claiming transparency claiming this openness while doing everything possible to try to obscure the true intention with TrueUSD that's obscuring the nature of the ownership where the collateral is stored, how it's stored, and what that means.

00:20:54:12 - 00:21:26:11
Bennett Tomlin
Even the nature of like we talked about this when the chain Argos guys were on, it seemed like attestations for TrueUSD restarted once they started manually sharing the information for this non escrow bank account with The Network Firm. And so that isn't particularly transparency. That's not using the blockchain for your best effect. Same with this BTC. There are millions of dollars of value being placed in these protocols and being treated as if it is fully collateralized by bitcoin with no other claim against it without the evidence.

00:21:26:11 - 00:21:50:25
Bennett Tomlin
That's true. And like this is a pattern throughout all of Justin's things and we've talked about on some of his Tron projects, but just sticking close to him for now, like he there's this other new project they launched recently called Stake USD and Staked USD is supposedly controlled by a new entity called the RWA DAO or Real World Assets DAO.

00:21:51:02 - 00:22:13:24
Bennett Tomlin
And the idea is they're going to take all these stablecoins and they're going to invest them in something in the real world and pay the yield back to token holders. Unfortunately, there doesn't seem to actually be a DAO. There was no they claim they did this in collaboration with JustLend Dao, but there's no proposal on JustLend DAO related to this.

00:22:14:00 - 00:22:49:20
Bennett Tomlin
No discussion of this in the JustLend governance forums and 85% of this staked USD goes to Huobi, which again is almost certainly Justin Sun owned. But we have to say Justin Sun advised because Justin Sun still feels the need to lie about this. 85% of the total supply of this new Tron token that's being invested in something with no disclosure goes to this exchange and is included in the Nansen dashboard that who will be published to try to prove they have all the assets they claim.

00:22:49:20 - 00:23:09:18
Cas Piancey
So and this yeah this gets me back into so woe be like I just want to I want to point out to everyone and I know some people are aware of how I have my my own personal animosity towards Justin Sun that he is my Moby-Dick, my, my white whale. If you will.

00:23:09:21 - 00:23:13:24
Bennett Tomlin
Watch the episode with Josh Cincinnati and Laurence for that one.

00:23:13:27 - 00:23:51:16
Cas Piancey
Right. And many other episodes as well. When you look at at everything combined for this for this gentleman, um, he's not allowed in mainland China anymore. I want to make this clear under, under his passport that is his Chinese passport. He is no longer allowed in the country. When he does go, you can almost guarantee that he is using a St Kitts and Nevis passport or his Grenada passport or his Malta passport or his whatever passport, his Central African Republic passport, whichever one he wants to pop out and use.

00:23:51:19 - 00:24:09:01
Cas Piancey
He's using one of those instead. Why? Well, obviously because the the CCP wouldn't want him coming back. Why won't you got to ask them? I don't know. I don't know why they what would happen if he did return under his passport.

00:24:09:01 - 00:24:11:28
Bennett Tomlin
Zhao Dong.

00:24:11:28 - 00:24:17:04
Cas Piancey
Right. Yes. Go ahead and watch our episode about Zhao Dong and RenRenBit.

00:24:17:06 - 00:24:58:02
Cas Piancey
But there there's also the issue of him establishing all these companies in Hong Kong, not under his again, not under his Chinese name. He's only doing it with his St Kitts and Nevis passport. He's using other individuals to including apparently his parents, possibly as like individuals who are owning these companies or representing these companies like Techteryx, like the things he's doing to jump through hoops, to try to get through the legal system in ways that he must think are effective.

00:24:58:05 - 00:25:22:08
Cas Piancey
It just screams red flags on everything he touches. So whether it's Poloniex, or USDD, which is just the stupidest fucking stablecoin in history. Or there's the other one. What was it? JUSD or USDJ. Whatever the hell it is, that one is us actually above right USDJ Perpetually above a dollar. I think it's probably trading for a dollar 12 right now or something like that.

00:25:22:08 - 00:25:24:10
Cas Piancey
It doesn't. It doesn't matter.

00:25:24:12 - 00:25:27:14
Bennett Tomlin
None of it matters in a cosmic sense.

00:25:27:14 - 00:25:50:08
Cas Piancey
Now it all of it. And this is this has been my one of my issues for a long time is that for for probably two, three, four years now, people have been saying Justin is rich, Justin is so rich. This was then this is so similar to the SBF narrative to me, because when they go, he's so rich, I go, okay, where though he with what?

00:25:50:08 - 00:26:19:09
Cas Piancey
With what assets, what real world assets does this guy have that suggests he actually has money? And when you look at the shit he's doing with his cryptocurrencies, the stuff he's hiding, the stuff he is stealing, the lawsuits he's involved in, like the wallaby people are suing him because he has continued to use the Huobi name when he said he wasn't going to like all of these things combined to show an individual I wouldn't I wouldn't trust for any amount of money, any amount of money.

00:26:19:09 - 00:26:39:15
Cas Piancey
I wouldn't hand this guy a nickel. I don't know what this guy would do with it. Like this guy screams bad news and you just you just naming more things to me where I'm like, huh? And this is to be expected. Okay. He says he wrapped the Bitcoin, but he didn't do it. Then he sent all his money to will be and then he and he stole customer funds and they need it.

00:26:39:22 - 00:26:42:17
Cas Piancey
Sure. None of this is surprising to me.

00:26:42:19 - 00:27:33:13
Bennett Tomlin
Yeah, and I think that's kind of what we're getting at here, is these events exist in a pattern of behavior for just insane. And the reason I think it's important to highlight these specific ones is the same reason we wanted to have Jonathan and Patrick of ChainArgos on is because this kind of offshore financial system involving many of these actors Alameda Research, FTX, Justin Sun, TrueUSD and of course our friends at the world's most transparent stablecoin Tether has its uses from like light gray but never fully white to like fully dark black black market stuff and many of the behaviors and maneuvering seem like someone who has fewer dollars than they're supposed

00:27:33:13 - 00:27:53:27
Bennett Tomlin
to for all the people they owe and think if they can keep things moving for long enough, that fact won't come out. And sometimes these entities end up in that position because bank accounts get seized, bank accounts get frozen money they thought they had ends up not being money they have. And that could be part of this, right?

00:27:53:27 - 00:28:16:11
Bennett Tomlin
Like TrueUSD presumably lost some money at Prime Trust though apparently it's only 20K And so yeah, you have kind of this pattern where sometimes these entities seem really wealthy because they're behaving really wealthy, but they're behaving really wealthy to continue the fiction that they have all that money because they need to have all that money or they're in much deeper shit.

00:28:16:16 - 00:28:39:15
Cas Piancey
One of the important parts that I think everyone has already kind of forgotten about the FTX’s and Alameda fiasco was that he was marking illiquid assets as though he could sell them on the open market for the value they were trading at on FTX or whatever that day. Like insanity, you're going to be taking massive haircuts if you try to sell these positions.

00:28:39:17 - 00:28:56:12
Cas Piancey
And we don't know what the other investments are for things like TrueUSD, right? We don't know what these other investments are. We don't know what these things are that are actually backing this thing at this point, other than they're being marked to some imaginary value that says that they're fully backed and we don't know what it's backed with.

00:28:56:12 - 00:28:58:28
Cas Piancey
And this is like this is part of the issue, right?

00:28:58:28 - 00:29:26:12
Bennett Tomlin
Yeah, Yeah. And like even specifically in TrueUSD, we already talked about how some of these things aren't appropriately held in escrow, but they won't make any kind of representations about the quality of securities being held at First Digital in Hong Kong, where they're holding a significant portion of their assets. And First Digital themselves just launched their own stablecoin, which immediately got listed on Binance like immediately, like two days after it launched was already listed.

00:29:26:12 - 00:29:50:05
Cas Piancey
They said so. So to be fair and just so everyone is aware, they they started the the stablecoin in in partnership with Binance and and like Huobi and these and like these and Justin Sun like that they were working together with them for sure from the very get go and like that like there's no that's not that isn't surprising to me.

00:29:50:07 - 00:30:05:19
Cas Piancey
But I do want people to realize that First Digital is a trust based out of Hong Kong. Do do we really think that they're moving billions of U.S. dollars into and out of Hong Kong through this, through this, through this trust? Maybe? I doubt it.

00:30:05:24 - 00:30:50:20
Bennett Tomlin
It's like we talked about with Jonathan and Patrick. If they are, it's in a more convoluted transaction. Right. Involving other counterparties or entities or structures between the U.S. dollars and the assets that end up at first digital backing, TrueUSD. And that's been kind of the point of complexity at the heart of these stablecoins since we started covering Tether in 2017, the mechanics they claim, don't match up with their behavior, like the mechanics of them collecting a U.S. dollar from someone, storing it in a bank account and only then issuing the asset and then wiring that dollar back out only when it's redeemed does not match up with the behavior of really any of the

00:30:50:20 - 00:31:16:06
Bennett Tomlin
stablecoins USDC and Paxos whatever, fine, the US based ones we're not going to worry about. But like that has been true since the beginning and we have heard for years with varying degrees of accuracy that Tether’s transactions actually involved a much more convoluted set of counterparties that was meant to kind of aid in capital flight, transform renminbi into tether's.

00:31:16:08 - 00:31:29:04
Bennett Tomlin
So that can be used there. Right. And so we need to remember when we're talking about just and all this, that one of the principal use cases for many of these fake dollars is capital flight, Is money trying to get out of China.

00:31:29:08 - 00:31:50:10
Cas Piancey
Yeah, I mean, it's been a point that Protos has been particularly keen to make about about FTX’s, about these entities and about some other some other stuff lately. Like I do think you know, you don't have to be like whether you agree whether you think Chinese capital flight is a good or bad thing, it doesn't really matter.

00:31:50:10 - 00:32:05:10
Cas Piancey
It just is a thing that's happening. And clearly, you know, someone's mad about it, right? You're breaking those rules and you're not obeying the laws and someone's going to be pissed. Either it's going to be the U.S. or it's going to be China or it's going to be both.

00:32:05:16 - 00:32:24:20
Bennett Tomlin
Well, and and it has been China. China's busted a couple of them tether what they call money laundering rings, which always sit somewhere between like money laundering, gambling proceeds and capital flight are all kind of described by the Chinese state apparatus as like broadly the same type of thing. But they've busted a couple of tether based rings in the last couple of months.

00:32:24:22 - 00:32:26:13
Bennett Tomlin
So they don't seem happy about that.

00:32:26:18 - 00:32:51:16
Cas Piancey
No, I mean, the the Chinese government has made it very clear how they handle this stuff. And that is a basically shoot first, ask questions later. They they're not. Zhao Dong was sitting in a jail cell for a year before he had a trial. And the trial lasted for like three days. And he was guilty. Right. Like these this they they don't operate the way we do here.

00:32:51:16 - 00:33:10:12
Cas Piancey
And I'm not suggesting that's a good thing. I'm suggesting that's a real thing. And that that is what you have to consider if you're going to be doing business in these places or with people in these places. And I think like Justin Sun is a prime example of the way you know, I don't know what you want to call it illicit.

00:33:10:12 - 00:33:21:29
Cas Piancey
I don't know how you want to term it. Just funds that are questionable, questionable in their sourcing, questionable in how they were acquired, questionable in in what they're destined to do.

00:33:22:01 - 00:33:22:19
Bennett Tomlin
Funds that.

00:33:22:19 - 00:33:23:18
Cas Piancey
The way those funds.

00:33:23:18 - 00:33:26:11
Bennett Tomlin
the banking system is reticent to accept.

00:33:26:13 - 00:33:32:29
Cas Piancey
Which is crazy because the banking system is will happily accept most money is you got to be.

00:33:32:29 - 00:33:37:10
Bennett Tomlin
HSBC will build you a window to shove your cash through if you need to.

00:33:37:12 - 00:34:02:20
Cas Piancey
This is exactly right. So if you can't get HSBC on board, what the hell are you doing? Yeah, I don't know. A million questions about Justin Sun still so I'm glad we're bringing him up again, even though I hate talking about it. And yeah, we'll see what happens. We'll see what happens with True. Is there anything else that you want to touch on with these with these platforms, these Justin Sun related platforms and, and vehicles?

00:34:02:22 - 00:34:15:00
Bennett Tomlin
Well, I just want people to know that I know the CasCoin Exchange proof of reserves has been delayed for eight months, but we're still hard at work on it and we expect to have it out any day now and we guarantee it'll show you that we have assets.

00:34:15:03 - 00:34:46:17
Cas Piancey
Yeah, we are using a top 100 auditor, so I don't know why anyone could claim otherwise. And I look forward honestly, I'm looking forward to us getting the the audit done because I'm tired of people FUDding my CasCoin bags. Remember guys that yes, we are under investigation by the DOJ and the SEC and the CFTC, but under investigation means that they haven't charged you with anything yet.
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4 responses to “Episode 122 – Justin Sun Owns TrueUSD”

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