Tether’s USDT and Techteryx’s TUSD are both stablecoins pegged to USD, but they have important differences. 

In this Tether (USDT) vs TrueUSD (TUSD) review, we’ll explore their similarities and differences and discuss the risks and benefits associated with each coin.

The History of Tether (USDT) and TrueUSD (TUSD)

TrueUSD was launched by Trust Token company back in 2018. Rafael Cosman, co-founder and CEO of TrustToken, announced the stablecoin was sold to a Chinese conglomerate in late 2020.

Although TrueUSD’s market cap had been smaller compared to USDT and other popular stablecoins, it had built a good reputation in the crypto ecosystem under the Trust Token management. 

The main draw of TrueUSD is that it’s supposed to be 100% backed by US dollar reserves in cash, managed by banks and escrow services. TrueUSD also received regular attestations from a reputable public accountant company, Armanino, increasing the public trust in the stablecoin.

However, TUSD’s acquisition by “Techteryx” in December 2020 changed things. Techteryx never released any information regarding the stablecoin’s new owners’ identities. Public attestations stopped for six months after the initial purchase, and in 2022, Armanino, the attesting company, announced its withdrawal from the crypto industry, publishing a final report on the stablecoins reserves in December 2022.

In January 2023, TUSD became legal tender in Dominica, along with six other digital assets based on Justin Sun’s Tron blockchain.

In February 2023, a new online reserve explore system developed via the data-oracle project Chainlink was announced for TUSD. Information on reserves is collected from custodians through an accounting firm called The Network Firm LLP.

In the same month, Binance minted 50 million USD worth of TUSD after troubles with regulators over the Binance exchange’s own stablecoin BUSD.

Once marketed as the only US-regulated stablecoin, TUSD now stands at the center of a complex web of economic relations between the most controversial and shady figures in Crypto, including CZ’s Binance, and Justin Sun’s TRON who also manages HTX, Poloniex, and Dominica’s experiment with stablecoins. It’s the fifth-largest stablecoin in the world.

USDT, the first stablecoin in the crypto market, was launched in 2014 by Tether Holdings Ltd. USDT is the largest stablecoin by market cap, but it has been slowly losing ground to newer stablecoin, particularly USDC, amidst various controversies regarding its conduct and reserves.

After its launch, USDT entered the market through the Bitfinex exchange, which is also owned by Tether’s parent company iFinex. Tether’s relation to Bitfinex was first exposed by Paradise Papers.

Tether’s involvement with Bitfinex, once exposed to the public, unraveled a lot of mysteries about the world’s largest stablecoin company, including allegations of Bitcoin price manipulation and the state of its mysteriously missing reserves.  

It’s now common knowledge that Tether has a problem with disclosing its reserves: The company paid over 60 million USD in fines to New York State Attorney General’s (NYAG) office and the CTFC to settle the claims that it had misled customers regarding the reserves their stablecoin. 

Tether claimed it would soon conduct a full audit to show that the company had the reserves to fully back USDT after the problematic state of reserves became public. But the audit isn’t coming anytime soon since most audit companies quietly stopped performing crypto audits, citing the difficulty of ascertaining full custodianship regarding anything crypto.

If you want to learn more about USDT and TrueUSD, check out our articles on TUSD, USDT, and Bitfinex. You may also find our reviews of Poloniex and HTX (owned or managed by Justin Sun/TRON foundation) relevant to the topic.

How Do Tether and TUSD Work?

USDT and TUSD are both stablecoins pegged to USD. Stablecoins have become the cornerstone of the crypto economy since their launch because they provide two central qualities cryptocurrencies lack: liquidity and stability.

As stablecoins pegged to USD, USDT and TUSD are supposed to be worth 1USD, come hell or high water. Their primary function is to serve as entry and exit points to the crypto economy. 

For the retail investor, it means you can purchase USDT with USD and then use USDT to do pretty much anything that can be done in the crypto market, including participating in DeFi experiments or investing in altcoins. TUSD, as the fifth-largest stablecoin, doesn’t have as many uses as USDT, but in theory, it can work the same.

Collateralization

It is clear that stablecoins have to be stable in order to work. How do they do that? Both USDT and TUSD have a similar collateralization mechanic: they are backed by real-world assets like cash and cash equivalents.

That means traders can mint or buy USDT or TUSD by putting USD as collateral. If you want to mint 100 TUSD, for example, you send 100 USD to a TUSD custodian via an escrow service and receive your newly minted TUSD at your specific TUSD wallet address. It’s pretty much the same for USDT: although retail users rarely mint USDT for themselves, as they can easily buy it on various exchanges.

In theory, all USDT and TUSD in circulation are backed by cash and cash equivalents held in banks and custodial services. Therefore, whenever you need to redeem your assets, you can do so by sending your coins to the issuer and receiving the same amount of money you invested in them. It’s a miracle solution for an industry defined by volatility.

State of Reserves

Of course, the real world is rarely as neat as the writing on the whitepaper: Tether has come under fire for misleading customers regarding the state of its reserves. An SEC investigation revealed that the asset wasn’t 100% backed with reserves as the company had been suggesting for several years.

Tether hasn’t gone through a proper audit that proves the company can back their asset. It has received attestations that show it reduced its controversial commercial paper usage considerably, but attestations are not audits. They don’t prove the company’s finances in any meaningful way.

TUSD also received regular attestations from public accounting companies after its launch in 2018. Armanino’s (the independent company that provided the attestations) blockchain division even developed an online reserve explorer for TUSD named the Trust Explorer. Anyone could use it to check TUSD reserves in real-time on the website.  

But the attestations and real-time checks stopped for about six months when TUSD was sold to a mysterious “Chinese Conglomerate” that was “not Justin Sun” at the end of 2020. Armanino published its last attestation on the state of TUSD reserves in December 2022, and the company quit providing attestations to the crypto industry.

The team behind TUSD announced another solution: the team behind the stablecoin deployed a mint-lock smart contract in partnership with Chainlink and an accounting firm called The Network Firm LLP to control the amount of TUSD in the market. 

To put it simply, that means The Network Firm attests to the TUSD reserves, and smart contracts ensure unbacked TUSD can’t be minted. 

Problems with Attestations and Cash Equivalents

Another important detail relevant to both assets is the meaning of “cash equivalents.” Tether received much criticism when it was revealed that it held short-term commercial paper from unknown companies as cash equivalent. The problem with cash equivalents are that they are not cash, so they aren’t as liquid. For example, if Tether gives a loan to a third party, it can receive commercial paper as a cash equivalent. But if the borrower defaults on payment, the loan is gone.

This is part of the problem with attestations and proof-of-reserve solutions stablecoin issuers use. The other problem is that since they are not audits, there is no way of knowing if the issuer’s debts outweigh their reserves: in which case, the stablecoins reserves can be drained when company finances fail.

What Are the Main Use Cases of USDT and TUSD?

As we explained above, the true value of stablecoins comes from their stability and liquidity: you can send money to anyone, anywhere, through stablecoins, and they can redeem it in different ways.

USDT, of course, takes it to the next level: as the largest stablecoin, it has immense liquidity and can be exchanged for almost every cryptocurrency. You can buy crypto with USDT and sell your crypto for USDT anytime. 

Not to mention, USDT is the darling of most DeFi platforms and projects: you can stake it, loan it, or borrow it on several protocols.

Merchants can also accept crypto payments with USDT.

But what about TUSD? When Chainlink advertised their collaboration for TUSD’s new proof-of-reserve minting system as a new step for transparency in stablecoin markets, a user aptly replied with, “great, but who uses TUSD??” 

That’s an astonishingly good question, as TUSD’s market cap is much smaller than USDT, and it doesn’t provide the perks USDT gained through long-term market exposure. 

So, who uses TUSD?

The answer is, unsurprisingly, a few: but their identities are very telling. According to the CEO of blockchain analytics company Chainargos (Data Finnovation on Twitter), 70% of all TUSD redemptions (meaning 70% of all USD that went to TUSD) between January 2019 and October 2022 were done by four parties. 

That means TUSD is largely used by big crypto actors to move around money. Who are these actors? Well, the first, with an astonishing 4.4 billion USD, is Sam-Bankman Fried’s bankrupt “hedge-fund” Alameda Research, which was reportedly much more than a hedge fund.

In second place is Justin Sun with 971 million USD. Third place belongs to the infamous nomad bridge hacker (or perhaps a white hat hacker from the incident) with 585 million, and finally, we have QuadrigaX’s convicted fraud Michael Patryn, or Sifu, as he is known these days, with 100 million.

In other words, retail users don’t have much use for TUSD, but some of crypto’s great frauds have used it extensively. The question is, why? There is no exact answer to this, but when you consider Justin Sun opened a trading pool for trading between USDD, USDJ (both owned by Sun), TUSD, and BUSD a few days before Binance minted 50 million worth of USD, a picture starts to emerge. Essentially, TUSD is a great way of moving funds.

Tether (USDT) vs TrueUSD (TUSD) Price History

USDT Price History

Since USDT is pegged to USD, it should always be worth $1. Price fluctuations may occur when the demand rises or falls suddenly, but the price quickly recovers to $1. 

TUSD Price History

1 TUSD should always be worth $1, but slight price fluctuations are normal when the demand for the asset rises or falls in a short period.

Tether (USDT) vs TrueUSD (TUSD) Market Cap

USDT Market Cap

There are over 60 billion USDT tokens in circulation as of February 2023. Tether doesn’t set a cap on USDT supply, as the company can issue new USDT tokens when the demand for the asset increases. 

Tether is supposed to have reserves for each minted USDT, but an investigation has revealed this hasn’t been the case.

USDT exists on many blockchain networks, including Ethereum, Algorand, Hedera, Tron, and Solana, and can be purchased and traded on most crypto exchanges.

TUSD Market Cap

TUSD is the 5th largest stablecoin and the 55th-largest cryptocurrency by market capitalization. As of February 2023, there is a circulating supply of 967 million TUSD.

TUSD doesn’t have a total supply, and new TUSD tokens can be issued based on the demand for the asset. The process is controlled by smart contracts.

Normally, we can easily tell who is exactly responsible or in charge of issuing a coin. For example, for USDT, the responsible party is the company Tether. With TUSD, things are a bit more complicated. While Techteryx owns the stablecoin, Archblock (formerly TrustToken and TruFi) seems to have a hand in managing some of the affairs. The minting mechanism is controlled by a smart contract.

TUSD runs on the Ethereum, TRON, Avalanche, and Binance Chain blockchains and is available on most crypto exchanges and many DeFi protocols. 

Tether (USDT) vs TrueUSD (TUSD) Main Similarities 

USDT and TUSD are both stablecoins pegged to USD. Neither asset has a set supply, as they can be minted depending on the demand. USDT and TUSD are both controversial assets.

You can find USDT and TUSD on most crypto exchanges. Several DeFi protocols offer staking opportunities for both assets. 

Opaque Business Structure

USDT is controlled by Tether, a private company. TUSD is controlled by Techteryx, which is, for some reason, never ever mentioned, even on the stablecoin’s own website. The website instead lists a few members of the Trust Token team. 

TUSD’s business structure takes opaqueness to another level, or at least to the level of Tether before Paradise Papers leaks. We know that the ownership of TUSD has been moved to Techteryx back in 2020, thanks to a company blog post. 

However, that hasn’t stopped anyone from associating the company with TrustToken, which later rebranded as TruFi, which later rebranded as a separate venture capital firm named Archblock. Every online outlet and piece of media, including press releases, Twitter posts, and various websites, sounds like Archblock issues the stablecoin, except for Archblock’s own website. So what’s up with Techteryx?

At this point, it won’t come as a surprise that Techteryx is indeed related to Justin Sun: it is most likely a front company he manages through his many contacts: In this case, one Steve Liu, who is Techteryx’s CEO. 

He is also the President of ApeNFT (an NFT art foundation that’s known for its partnership with, you guessed it, Justin Sun’s TRON), Director Board Of Directors at Valkyrie Investments (where Justin Sun keeps a large number of his assets, which makes up 90% of the money at Valkyrie’s crypto division, and is a shareholder) and Chief Executive Officer at BitTorrent, Inc (which was acquired by Justin Sun’s Tron in 2018) since May 2021.

Despite vehement denials from the TrueUSD team, it seems pretty clear that Sun is very much connected to the company.

Essentially both Tether and Techteryx centralized, for-profit endeavors with opaque business structures.

State of Reserves

Neither company releases audits of their reserves: instead, they regularly (or semi-regularly) publish attestations. 

Tether first promised an audit back in 2015, which is yet to arrive. Combined with the latest controversies regarding its reserves and increasing regulatory pressure, Tether’s public standing has taken quite a hit.

You may think that TUSD reserves are more transparent than USDT reserves, as the reserves can be checked online via the proof-of-reserves solution the company introduced. 

However, proof-of-reserve attestations aren’t the same as audits: they don’t guarantee that the company and the management are in good health financially and legally. Also, in TUSD’s case, the issue isn’t so much if there are enough reserves but how exactly the reserves are being used.

One more thing regarding TUSD reserves is that the Binance chain has two wallets that hold non-collateralized tokens, according to Armanino’s latest attestation report. 

One is a non-circulating wallet that contains 755,385,085.41 TUSDB non-collateralized tokens that are frozen. Another is a non-circulating time lock account on Binance Chain that holds  805,553,870.06 TUSDB. Overall, that makes over 1.5 billion TUSDB that aren’t collateralized. However, this may not be an issue, as the attestor may have sufficient reason to ignore these two accounts. The TUSD team has yet to explain how that exactly works.

Tether (USDT) vs TrueUSD (TUSD) Main Differences 

The main difference between USDT and TUSD is their reach. USDT is very liquid, meaning it has penetrated almost every nook and cranny of the crypto market.  

TUSD, on the other hand, is only the fifth-largest stablecoin and has a very slight market share, so its use cases have been largely limited. But this could easily change if Binance adopts the stablecoin. In many ways, USDT has become the behemoth it is only thanks to its early release and its adoption by big industry players. Now with Tether’s reputation problems, TUSD may emerge as an alternative to USDT. Even if Binance doesn’t adopt TUSD, it is clear that the stablecoin is being marketed as a “safe and regulated” alternative, dubbed as the world’s most transparent stablecoin.

However, please note that the biggest difference between Tether and “Techteryx” (the company which allegedly controls and issues the TUSD token) is that the public and the authorities at least have some information about one of them. 

 

Tether’s fall from grace was quite public, or at least, it was as public as anything can be in the crypto industry, where information takes a long time to reach mainstream audiences.

Techteryx, on the other hand, is a black box. 

Market Reach

The biggest difference between USDT and TUSD is their respective market reach. USDT is the biggest stablecoin by market cap and the third largest cryptocurrency after bitcoin and Ethereum. TUSD is only the fifth-largest stablecoin and the 55th-largest cryptocurrency. 

That means USDT is available on almost all exchanges and can be traded against most cryptocurrencies. TUSD pairs are less common than USDT pairs.

Risks Associated With Tether and TUSD 

Risk of Losing Their Peg

The biggest risk associated with stablecoins is the risk of destabilization. Destabilization occurs when a stablecoin can’t meet its pegged price.

How do stablecoins lose their peg? Well, stablecoins like USDT and TUSD depend on external cash reserves to protect their peg. Essentially, as long as you are able to redeem your stablecoin for 1USD, it’s good. 

But what if the reserves aren’t enough (and the asset isn’t fully backed)? Well, in such cases, a strong bank run can trigger a price crash. Imagine that everyone tried to cash their USDT at once, but the company couldn’t fulfill each order. The price would instantly crash, as the asset would be worthless.

This is a nightmare scenario for most crypto enthusiasts and regulators. USDT is so big that, if it crashes, it can take the entire crypto market with it, and the waves would also destabilize traditional finance. That’s partly why regulators are becoming more strict about cryptocurrencies.

Since TUSD is nowhere near USDT in terms of market capitalization, it wouldn’t take down the entire market if it crashed, though it would still wipe out millions of dollars.

Legal and Financial Risks

Stablecoins (and crypto in general) are heavily used in criminal and illegal transactions. Stablecoins are particularly suspect when it comes to money laundering and tax evasion. Tether has been accused of manipulating Bitcoin prices before, and the company may come under (further) regulator fire if authorities start enacting stricter control measures (which they plan to do).

One of the selling points of TUSD is that it’s a legal and regulated alternative to USDT, which makes it a safer investment. For example, you can find claims that TUSD is regulated by the state of Nevada online (or on TUSD’s website). This is most likely related to Prime Trust, a custodian company in Nevada that TUSD employs. But Prime Trust only holds about 36 million USD for TUSD, while a huge portion of funds is held by Signature Bank’s Signet (383 million), a private NYSFD-regulated bank, and 1stDigital Trust (525 million), which is based in Hong Kong. 

Finally, there is the fact that Justin Sun is the covert owner of the currency. Sun, who is reportedly under investigation by the FBI, has several coins and stablecoins under his name. The question is, why is he so careful about hiding his connection to this one?

Where Can You Buy USDT and TUSD?

You can purchase USDT on almost all crypto exchanges, including Coinbase, Binance, Gemini, Kraken, and Bitfinex, with fiat currency through credit and debit cards, bank transfers, Paypal, Apple Pay, Google Pay, or other third-party payment providers.

You can purchase TUSD on Binance, Kucoin, Poloneix, and HTX.

You can also purchase USDT and TUSD on decentralized exchanges in exchange for cryptocurrency. 

Beware that Crypto.com delisted USDT for Canadian customers due to regulatory issues.

How Can You Exchange USDT for TUSD?

You can exchange USDT for TUSD on most crypto exchanges, including Binance, Coinbase, Kucoin, and Bitfinex. Just check whether the crypto exchange you choose lists USDT/TUSD paring.

Future Plans for Tether (USDT) vs TrueUSD (TUSD)

Tether’s troubles with authorities gave its competitors a chance to encroach on its market cap, but the stablecoin isn’t leaving the market anytime soon. The company’s future is as mysterious as its reserves.

TUSD, on the other hand, has made several leaps lately: it successfully advertised its new proof-of-reserves system, had Binance mint 50 million worth of assets a few months after the exchange forcibly transferred all the TUSD in its care to BUSD, and increased its market cap remarkably. With Binance CEO seemly abandoning BUSD and minting TUSD to diversify Binance’s stablecoin assets, there is speculation that a new partnership might be born between Binance and Justin Sun.

Both assets will inevitably be affected by further crypto guidelines SEC is pressing for. One of the rules the SEC proposes is the regulation of crypto custodians (even off-shore custodians like 1st Digital Trust). 

It remains to be seen whether Sun’s connection to TUSD will become public knowledge, and how that will effect the currency, which is experiencing a moment of rebirth with its new and fancy proof-of-reserves system.