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Archblock files for bankruptcy, blames fraud and Justin Sun-linked deal

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Archblock, TrustToken, and TrueCoin, the firms originally behind stablecoin TrueUSD, have declared Chapter 11 bankruptcy protection, citing Techteryx’s failure to pay invoices and Archblock being defrauded by “a sophisticated criminal enterprise working out of Eastern Europe.”

This comes after Archblock and its sister firms became embroiled in a series of calamities and legal disputes and sold several key parts of its business.

Techteryx and Justin Sun

The affidavit of Michael Blank, the current general counsel for Archblock, claims that in 2020, Archblock committed to “a significant downsizing, materially reducing its burn rate and extending its operational runway.”

In order to achieve this, it made the choice to sell TrueUSD.

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Specifically, it chose to sell it to Justin Sun-connected Techteryx.

Read more: The legal battles of Justin Sun

This sale, according to the affidavit, was completed in December 2020.

However, despite the sale, Archblock was going to help Techteryx operate the stablecoin. The two firms entered into “an ongoing services agreement with revenue-sharing components,” which Archblock believed would “provide a stable and predictable revenue stream.”

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This revenue stream would eventually become something that Archblock was “almost entirely reliant on.”

This sale was for “approximately $28 million.”

However, according to the affidavit, in 2024, Techteryx “ceased paying several million dollars in outstanding invoices.”

First Digital Trust/Legacy Trust/Aria Commodity Finance Fund

Techteryx ceased paying after a series of extended legal disputes involving Legacy Trust, First Digital Trust, the Aria Commodity Finance Fund, and the Archblock firms.

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The firms had originally contracted with Legacy Trust to provide escrow services, which were later transferred to First Digital Trust. Eventually, First Digital Trust negotiated for the right to manage some of the funds and placed them in the Aria Commodity Finance Fund.

This was marketed as a supposedly low-risk fund.

Read more: TUSD up to 99.7% backed by speculative assets despite SEC settlement

It wasn’t.

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Instead, the firm invested the funds in much more speculative activities and eventually stopped responding to redemption requests.

This led, in part, to a Securities and Exchange Commission (SEC) lawsuit against the firm, which was settled.

Despite that settlement, TrueUSD is still substantially reserved by these assets and by the creditworthiness of Sun, who’s reportedly provided a $500 million line of credit to the beleaguered stablecoin.

There are still ongoing disputes in several jurisdictions related to these agreements.

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Prime Trust and Crypto Banking disappeared

In addition, the Archblock firms were pushed closer to bankruptcy with the downfall of various cryptocurrency banking partners and payment processors.

The affidavit claims that in 2023, “several critical banking and trust company partners collapsed or were shut down, including Silvergate Bank, Signature Bank, and, most significantly, Prime Trust.”

These failures, specifically Prime Trust’s insolvency, “created potential liabilities to end users of the TrueCurrency stablecoin products.”

$1.3 million in IRS Taxes

Besides these difficulties, a failure to adequately manage tax liabilities has also contributed to the Archblock firms’ bankruptcy.

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According to the affidavit, there was a problem with Archblock’s fiscal year 2021 tax payment.

Specifically, the affidavit claims that “in February 2025 the IRS began making inquiries as to an apparent processing error at the IRS where a FY 2021 tax payment made by Archblock was incorrectly processed and mistakenly issued back to Archblock as a refund.”

This has resulted in an estimated total liability of $1.3 million.

Eastern European “sophisticated criminal enterprise”

Placing the straw on this camel’s back was Archblock’s most recent failed fundraising.

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After Prime Trust’s failure and Techteryx’s so-called “nonpayment” as well as TrustToken and TrueCoin’s 2024 settlement with the SEC, Archblock committed to a new direction for the firm: “the development of a new stablecoin platform and the resolution of ongoing legal disputes.”

In order to support this new direction, Archblock sought out additional fundraising.

Read more: What’s up with TrueUSD and the rest of TrustToken’s stablecoins?

As part of this process, “one promising primary funding lead emerged.”

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Unfortunately, “this investment lead turned out to be a sophisticated criminal enterprise working out of Eastern Europe.”

This sophisticated criminal enterprise “ultimately defrauded Archblock of approximately $3 million.”

This resulted in changes to “Archblock’s financial position that could not be remedied through further cost reductions or asset sales.”

As such, “throughout 2025, Archblock focused on ceasing remaining activities, resolving obligations where possible, and selling any non-liquid assets.”

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Ongoing disputes

There are a substantial number of ongoing legal disputes that involve the Archblock firms.

These include its claims against the Prime Trust estate and Prime Trust’s claims against Archblock.

Archblock is seeking approximately $9 million it had deposited with Prime Trust at the time of bankruptcy, and the Prime Trust estate has claimed that Archblock benefited from preferential and fraudulent transfers.

It also includes the lawsuits it has engaged in against First Digital Trust, Techteryx, Aria Commodity Finance Fund, and other related entities.

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These suits center around the permissions that the Archblock firms gave to the Trust firms, what representations were made by the Trust firm and the Aria Commodity Finance Fund, and at what time individuals became aware of problems.

They also include Celsius’ and FTX’s claims against Archblock.

Celsius alleges that Archblock “promised customers that their deposits would be held securely and risk-free by ‘fiduciary partners’ in cash or cash-equivalent” but actually “gambled their customers’ deposits on risky offshore investments with partners who disclaimed any fiduciary duties.”

Allegations from Celsius are based on the funds that were invested in the Aria Commodity Finance Fund and its apparent failure.

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Additionally, “The FTX Recovery Trust alleges that Archblock LLC owed the Trust $8,512,910.”

Briefly, it’s important to remember that Archblock had a relationship with Alameda Research, a lead investor in TrustToken and the TRU token.

Additionally, Alameda was a user of the TrueFi platform and defaulted on approximately $7.3 million in loans it obtained through this platform and is mentioned as a creditor in other documents filed in this bankruptcy.

Alameda is also listed as a possible creditor on the Creditor Mailing Matrix.

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Additionally, the schedules of assets and liabilities of Archblock (Cayman) lists an “Alameda Loan Receivable” with a “total face amount” of $7,508,173.15.

This same document notes that Archblock claims to have held digital assets on FTX, and it’s requested $530,472.07.

Furthermore, the former Chief Executive, Daniel Jaiyong An, has been engaged in a years-long legal dispute with these firms.

Who’s on the Archblock bankruptcy creditor list?

Besides Alameda Research, there are a few other interesting names on the creditor matrix.

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One of these is Finder Wallet, a brief-lived Australian firm that offered yield on the TrueAUD (TAUD) stablecoin.

This firm was led by Australia’s so-called “crypto king” Fred Schebesta, who notably sold his over-the-counter trading firm, HiveEx, to Alameda Research.

Read more: Finder Wallet sued by Australian regulators for unlicensed Earn product

Several firms related to Crypto.com also show up in the creditor matrix.

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The SEC is also still listed on this creditor matrix, raising interesting questions about whether or not Archblock had paid the amount specified in its settlement with the regulator.

Protos reached out to Archblock with questions related to this ongoing bankruptcy, but it didn’t provide comment before publication.

Got a tip? Send us an email securely via Protos Leaks. For more informed news and investigations, follow us on XBluesky, and Google News, or subscribe to our YouTube channel.

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Crypto World

Coinbase Expands Morpho Powered USDC Loans to UK

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

TLDR

  • Coinbase has launched crypto-backed USDC loans for users in the United Kingdom through Morpho on Base.
  • UK customers can borrow USDC against Bitcoin, Ethereum, and cbETH without selling their holdings.
  • The platform allows loans to be issued in under one minute, and funds can be used onchain or converted to fiat.
  • Coinbase offers Bitcoin-backed loans up to $5 million USDC, depending on the collateral pledged.
  • Interest rates remain variable and update with Base block production instead of following a fixed schedule.

Coinbase has introduced crypto-backed USDC loans for customers in the United Kingdom. The company allows users to borrow against Bitcoin, Ethereum, and cbETH without selling assets. It powers the product through Morpho on Base and issues loans in under one minute.

Coinbase and Morpho Expand USDC Lending to the UK

Coinbase rolled out the borrowing service after expanding its US product earlier this year. The company routes all loans through Morpho’s onchain lending infrastructure on Base. As a result, users access open market liquidity instead of a traditional internal loan book.

The platform allows customers to borrow USDC against pledged crypto assets. Coinbase said borrowers can use funds onchain or convert them into fiat for spending. The company confirmed that interest rates remain variable and update with Base block production.

Coinbase reported that total loan originations through Morpho exceeded $2.17 billion USDC as of April 14, 2026. The figure reflects activity before the product’s first international launch. Morpho described the integration as “one of the largest DeFi distribution moves to date.”

Bitcoin, Ethereum, and cbETH Back UK Borrowing

The UK version supports Bitcoin, Ethereum, and cbETH as eligible collateral. Coinbase offers Bitcoin-backed loans up to $5 million USDC, depending on pledged assets. The company applies variable interest rates determined by onchain markets.

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Borrowers do not face a fixed repayment schedule under the current structure. However, the system can liquidate positions if loan value rises too high against collateral. Coinbase stated that rates adjust automatically with each new Base block.

The company launched its US borrowing product in January 2025. At that time, eligible US customers could borrow USDC against Bitcoin through Morpho. The company structured those loans with variable rates set by onchain supply and demand.

Coinbase said the UK expansion aligns with its broader consumer finance plans. Over the past year, the company secured UK VASP registration from the Financial Conduct Authority. It also introduced a GBP savings account in partnership with ClearBank.

The company expanded decentralized exchange trading access for British customers during the same period. Now, it adds borrowing as another feature for UK users. Coinbase aims to convert idle crypto balances into accessible liquidity.

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The product operates fully on Morpho’s decentralized lending framework. Coinbase connects customers directly to liquidity pools on Base. Therefore, the company avoids maintaining its own lending inventory.

Coinbase confirmed that loans can be issued in less than one minute. Users can draw USDC immediately after pledging collateral. The company stated that the process runs entirely through smart contracts on Base.

Coinbase continues to monitor loan originations across supported markets. As of April 14, 2026, total originations surpassed $2.17 billion USDC. The UK launch marks the company’s first expansion of the Morpho-powered borrowing product outside the United States.

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JSCC Tests Japanese Government Bonds as Digital Collateral on Canton

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JSCC Tests Japanese Government Bonds as Digital Collateral on Canton

Japan Securities Clearing Corporation (JSCC), part of Japan Exchange Group (JPX), said Monday it will launch a proof of concept with Mizuho Financial Group, Nomura Holdings and Digital Asset to test the use of Japanese government bonds as digital collateral on the Canton Network.

The project will examine whether Japanese Government Bonds (JGBs) can be transferred and managed onchain while maintaining the legal status of the bonds under the Book-Entry Transfer Act and the Financial Instruments and Exchange Act.

The trial will also test whether integrating existing systems with Canton’s blockchain infrastructure can support more sophisticated, real-time collateral transactions on a 24/7 basis, including in cross-border use cases.

Japan’s Financial Services Agency selected the initiative in February for support under its Payment Innovation Project, which is part of the FinTech PoC Hub, the announcement states.

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The trial puts one of the world’s biggest sovereign bond markets into the live debate over whether collateral can move more efficiently across digital market infrastructure without breaking existing legal and supervisory frameworks.

PoC trial for digital collateral management using JGBs. Source: JPX

The companies said the trial comes as the use of digital assets accelerates in the United States and other markets, with momentum also building in Japan, and that the outcome is expected to inform discussions on how JGBs might be used in digital collateral processes, though no commercial rollout has been specified.

Related: Japan approves bill to classify crypto as financial instruments

Canton expands government bond tests

An earlier Canton pilot in December 2025 saw tokenized US Treasuries reused as collateral in real time between major dealers and market participants, including Bank of America and Société Générale. 

Those tests highlighted the potential to reuse high-grade government securities onchain across multiple participants, and the new JGB trial extends that approach to Japan’s government bond market. 

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Separately, in February, the United Kingdom’s government appointed HSBC’s Orion platform to host issuance for its Digital Gilt Instrument pilot in the Bank of England’s Digital Securities Sandbox as it explores distributed ledger technology for sovereign debt. 

Cointelegraph reached out to JSCC and Digital Asset for comment, but had not received a response by publication. 

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