Amid the memecoin frenzy on the Tron network, Justin Sun is facing backlash for the controversial removal of over $700 million in Bitcoin (BTC) as USDD\u2019s collateral without the Tron DAO Reserve\u2019s vote. Sun has now addressed the situation after the move raised concerns about the stablecoin\u2019s decentralization.<\/p>\n
On Wednesday, online reports revealed that 12,000 Bitcoin, worth around $732 million, were removed from Tron\u2019s Decentralized USD (USDD) stablecoin collateral reserves.<\/p>\n
USDD is a decentralized over-collateralized stablecoin pegged to the US Dollar through TRX and governed by the Tron DAO Reserve. According to the report, the significant change means the stablecoin is now almost fully backed by TRX<\/a>, except for 20 million USDT.<\/p>\n\n The modification was done \u201csilently\u201d without the DAO\u2019s consultation or approval despite the continued emphasis on community governance. Reportedly, the USDD transparency page listed 12,000 Bitcoin<\/a> under an address, which has now been removed.<\/p>\n The removal raised questions among investors who criticized the lack of transparency. Many X users questioned the \u201cdecentralized stablecoin\u201d narrative claim by the Tron Foundation.<\/p>\n Other community members drew parallels between Sun\u2019s \u201cshady\u201d actions and the behavior that led to the collapses of UST or FTX. Meanwhile, others noted that the news seemed like \u201c100 red flags.\u201d<\/p>\n Veritas Protocol alleged<\/a> this is not the first issue with USDD\u2019s collateral. Per the post, it \u201chas also faced issues with its collateral, such as storing significant amounts of HTX without consulting the DAO.\u201d<\/p>\n Following the criticism, Justin Sun addressed users\u2019 concerns in an X post. Tron\u2019s founder claimed that USDD\u2019s mechanism is \u201cnot mysterious\u201d since it works like MakerDAO\u2019s DAI.<\/p>\n Sun explained that when the collateral exceeds the amount specified by the system, collateral holders can move the funds. Per the post, this amount is usually set between 125% and 150%, and if the collateral falls below a certain level, \u201cit needs to be topped up; otherwise, the collateral may trigger liquidation.\u201d<\/p>\n\nJustin Sun Addresses Concerns<\/h2>\n