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Archblock CEO ousted during talks to sell TrueUSD to Justin Sun, lawsuit says

Archblock CEO ousted during talks to sell TrueUSD to Justin Sun, lawsuit says
DeFiPeople & CultureRegulation
Crypto billionaire Justin Sun tried to buy TrueUSD in 2020, according to a lawsuit.
  • A founder of TrueUSD developer Archblock is suing members of its C-suite.
  • Ousted CEO Daniel Jaiyong An accused the company of misleading investors and for breach of contract.
  • An alleged he was fired amid negotiations with Justin Sun to sell TrueUSD to Tron.

The ousted CEO of stablecoin TrueUSD developer Archblock is suing his former colleagues, alleging they muscled him out of the business so they could keep enriching themselves at the expense of investors.

Archblock co-founder Daniel Jaiyong An said in the complaint, filed with a Delaware court on July 14, that he was pushed out as CEO in mid-2020.

At the time, he had been in talks with billionaire Justin Sun over the sale of TrueUSD — the $2.8 billion stablecoin — to Sun’s blockchain company Tron, according to the suit, seen by DL News.

‘The lawsuit has nothing to do with me’

—  Justin Sun

“The lawsuit has nothing to do with me,” Sun told DL News. “It is [a] former Archblock employee suing Archblock.”

He did not respond to questions about whether Tron tried to buy TrueUSD in 2020, as the lawsuit alleged.

A deal for TrueUSD did end up going through that year. A British Virgin Island-incorporated consortium called Techteryx bought TrueUSD from Archblock in 2020, yet Archblock had continued to manage TrueUSD’s operations.

Techteryx, which isn’t mentioned in the lawsuit, will take over “full management of all offshore operations and services related to TUSD,” an Archblock subsidiary announced on the same day as the lawsuit was filed.

What’s in the Archblock lawsuit?

The Archblock lawsuit makes only passing reference to Sun.

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It details how in July 2020, An was pushed out of the company he had founded along with Rafael Cosman.

In 2017 and 2019, TrustLabs had issued a kind of investment contract called a “simple agreement for future tokens.”

The idea was to raise funds for the development of a tokenisation platform.

The TrustLabs SAFT gave investors the right to receive TRU tokens by 2023, with the understanding that they were funding the platform’s development.

The SAFT raised $35 million for TrustLabs, which released TrueUSD and the TRU tokens in 2018.

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In 2020, Cosman began pivoting away from the tokenisation platform to other revenue opportunities, however.

This resulted in a rewards programme for holders of TrueUSD called TrueRewards, later rebranded to TrueFi, the lawsuit alleged.

An feared TrustLabs’ new business model was a far cry from what they had promised investors, the filings said.

An wanted to disclose the pivot to investors and offer a refund opportunity, or risk being in breach of securities law, especially as the venture started to look more like a blockchain lender.

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But Cosman and senior staff feared losing their cash cow if they disclosed the new direction to investors, the suit alleged.

In July 2020, Cosman — along with TrustLabs finance director Alex de Lorraine and board member and advisor Tom Shields — led a vote to unseat An and install Cosman as CEO.

At this point, An was negotiating the sale of TrueUSD to blockchain company Tron, the lawsuit said.

The lawsuit includes screenshots of what appears to be a conversation between An and Sun negotiating the sale of TrueUSD.

Sun appears to have demanded that the transaction be kept private, while An pushed back.

‘That’s like handing over the keys to $140 million in escrow and the power to print money and no relevant stakeholders are told’

—  Daniel Jaiyong An

“It’s not feasible that we do a transaction and it remains privy to a few people — that’s like handing over the keys to $140 million in escrow and the power to print money and no relevant stakeholders are told,” An told Sun during the exchange, according to screenshots of a Telegram chat submitted in the filing.

An was defenestrated as negotiations with Tron were being finalised, leaving him unable to represent the interests of the SAFT investors, amid continued legal threats from the defendants, the lawsuit claimed.

‘Mr An’s current allegations will be shown to be without merit’

—  Archblock

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Archblock rejected the claims made in the lawsuit.

“Mr An’s current allegations will be shown to be without merit. We intend to file our response to Mr An’s allegations in court shortly, which will provide clarity on the matter,” a spokeswoman said.

“Given these matters are in litigation, we do not intend to make further comments outside of that process.”

If you have a tip on Archblock, TrueUSD, Tron or another story, please contact us at joanna@dlnews.com and eric@dlnews.com.

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