Justin Sun defends Tron network against terror financing allegations
- Tron founder Justin Sun invokes the idea of decentralization while responding to the claims.
- TRX token plunged on the news of the claims, stablecoin TUSD lost its peg.
Tron [TRX] founder and one of the most successful cryptocurrency entrepreneurs, Justin Sun, has been at the receiving end of intense public scrutiny in 2023.
From being sued by the U.S. regulators to allegations of irregularities in platforms controlled by him, notably crypto trading platform HTX [HT], the crypto Tzar has earned a lot of bad press in the year.
New report raises questions on Tron
The latest salvo directed at Sun’s empire was an explosive report by the global news agency Reuters. According to experts quoted in the report, terrorist organizations exploited the Tron blockchain to fund their anti-Israel military operations.
In fact, Tron surpassed the bigger and more popular Bitcoin [BTC] to emerge as the most favored crypto transfer network, the report revealed.
The analysis was based on crackdown done by Israeli security services between the period of July 2021 and October 2023. Apparently 143 Tron wallets linked to groups designated as terror organizations by Israel and the U.S. were frozen.
About two-thirds of all these wallets were seized in 2023 alone. Most of them belonged to Lebanon’s Hezbollah and Palestinian Islamic Jihad, both of which are actively battling Israel in the ongoing war.
The report bore similarities to an earlier investigation by TRM Labs, which talked about seizure of 40 addresses by Israeli counter terror financing group. All of the seized funds were in stablecoin Tether [USDT] on the Tron network.
Note that Tron is the largest network for USDT transfers, with reserves topping $47 billion as of this writing.
Interestingly, the military wing of Hamas, the al-Qassam Brigades, had stopped receiving donations in Bitcoin “out of concern for the safety of donors”. The adoption of Tron for its crypto financing efforts therefore marked a shift in its strategy.
Cryptos and blockchains could be like a double-edged sword. While a person can trace the value of transactions and movement between wallets, they cannot ascertain the identity of those doing the transactions. This anonymity has enabled malicious players to use blockchains for illicit purposes.
‘His Excellency’ reacts
Justin Sun made a veiled response to the accusations of terror financing. He reminded everyone of Tron’s decentralized ethos and the fact that it wasn’t controlled by a centralized entity.
“While we are committed to combating terrorist financing by integrating various analysis projects and partners, our top priority remains maintaining decentralization, ensuring the safety of everyone’s assets, and providing instant, affordable, and reliable transactions, as has always been the case.”
TRX, TUSD falter
While Sun tried to alleviate the FUD, the native token TRX took an immediate beating. The tenth-largest crypto by market cap fell 4.77% at press time, AMBCrypto found out using CoinMarketCap’s data.
The trading volume jumped more than 60% in the last 24 hours, suggesting that users were liquidating their holdings.
However, there weren’t any dramatic changes observed by AMBCrypto in the stablecoin activity on the network.
As per DeFiLlama, Tron witnessed net inflows of 5.49 million on 27th November. While there were withdrawals, about 28.38 million in USDT moved to the network. This was largely in line with the trend of the previous 2-3 days.
However, the attention-grabbing part was outflows of 6.84 million in TrueUSD [TUSD], the lesser-known stablecoin with purported links to Justin Sun.
Justin Sun also surprised the industry by minting more than $800 million in TUSD in September.
The alleged connection was enough to impact TUSD. The $209 million-valued stablecoin lost its U.S. dollar peg as traders started dumping it in the market. Riyad Carey, a researcher at crypto market data provider Kaiko, highlighted the extent of the selling pressure.
TUSD peg looking shaky as some big market sells are rolling through, largest of which was $3mn in a single order pic.twitter.com/TnU9nIWw1w
— Riyad Carey (@riyad_carey) November 27, 2023
How much are 1,10,100 TRXs worth today?
Furthermore, at one point, TUSD fell as low as 99.56 cents.
However, the peg rose to 99.72 cents as of press time, according to CoinMarketCap, although still lower than its ideal $1 value.