UPDATED 14:00 EDT / JULY 18 2018

EMERGING TECH

Andreessen Horowitz-backed TrustToken seeks $61M for its TrueUSD ‘stablecoin’

Asset-linked cryptocurrency startup TrustToken Inc. today announced a new $61 million token sale backed by Andreessen Horowitz for its TrueUSD token as it seeks to replace Tether as the “stablecoin” of choice on cryptocurrency exchanges.

Founded in 2017, the company is creating a platform for asset-backed cryptocurrencies known as stablecoins that are pegged to another stable asset such as gold or the U.S. dollar.

Stablecoins offer the benefits of a cryptocurrency, including digital exchange and smart contract support, without massive fluctuations in their price because the coin or token directly corresponds to a tangible asset. In the case of TrustToken’s first cryptocurrency, TrueUSD, it’s the U.S. dollar.

TrueUSD has already raised more than $60 million in releases of TrueUSD to accredited investors, and it has a market cap just shy of $80 million. The additional $61 million will add to that market cap and, like those releases before it, the tokens will be directly tied to actual U.S. dollar holdings.

The idea may sound odd to those not involved in cryptocurrency, but the idea of a stablecoin has strong support as a method of exchange. Along with Andreessen Horowitz’s a16z crypto fund, other investors include Founders Fund Angel, Jump Trading Capital, Foundation Capital, Danhua Venture Capital, Distributed Global, ZhenFund, Stanford-StartX, Signia Venture Partners, GGV Capital and BlockTower Capital.

TrustToken and TrueUSD are intended to replace Tether, a stablecoin issued by cryptocurrency exchange Bitfinex that’s subject to fraud allegations, including accusations that there were no tied assets to Tether issued.

“The dominant stablecoin at the moment is Tether, which is also pegged to the USD and does $2.4 billion in volume each day,” a spokesperson from TrustToken told SiliconANGLE. “It’s the lifeblood of the market; providing price stability as the market swings. It has also been dubbed ‘crypto’s ticking time bomb’ as Tether is being investigated the US Commodity Futures Trading Commission for fraudulently not holding the same number of USD in collateral as what as in circulation.”

The spokesperson added that research by the University of Texas also claims Tether was behind bitcoin’s meteoric rise “using a concentrated campaign of price manipulation. Tether has never opened their books and fired their only auditor at the end of last year, raising fears of a ‘bank run’ scenario. It is only a matter of time before it implodes and billions move into the next generation of stablecoins like TrueUSD.”

TrustToken has other stablecoins in the works as well and is currently planning to release TrueEUR and TrueYEN, tokens tied to the Euro and the Japanese Yen in the future.

The new round is open only to accredited investors via CoinList.

Image: TrustToken

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