Justin Sun Says He May Spend $5B To Save Crypto Even as USDD Fights To Hold Peg

Tron’s co-founder says his protocol is “ready to serve” struggling crypto firms, but questions have emerged over his capacity to do so

article-image

Source: Shutterstock

share

key takeaways

  • Justin Sun says he can step in to support struggling crypto firms as the liquidity crunch continues
  • In mid-June, just months after its launch, algorithmic stablecoin USDD fell as low as $0.93 and has yet to recover to over $1

Justin Sun, founder of the major blockchain network Tron, said he’s ready to join FTX CEO Sam Bankman-Fried in offering financial support to companies in the digital asset space that are struggling amid ongoing market volatility. 

In a Tweet earlier this month, Sun said that he and the Tron protocol are “ready to serve.” 

Loading Tweet..

Sun said he could spend up to $5 billion on acquisitions, according to a report from The Block, but as Tron’s algorithmic stablecoin USDD struggles to recover from a recent depegging, one analyst questions Sun’s resources.

“I don’t think he’s saying he’s got this capital for the good of the industry, rather, I think it’s for publicity about how strong the foundation is at Tron,” Marcus Sotiriou, analyst at digital asset broker GlobalBlock, said. “When it actually comes down to it, I don’t think they would actually be able to use $5 billion.” 

In mid-June, just months after its launch, USDD fell as low as $0.93 and has yet to recover to over $1. 

The Tron DAO withdrew 2 billion TRX, Tron’s native token, to protect the USDD peg on June 13. On June 17, the DAO withdrew an additional 3 billion TRX to defend the peg. Withdrawing TRX is part of a broader strategy to limit liquidity for traders shorting TRX and prevent a collapse.

TRX was intended to eventually be used to redeem USDD, similar to the relationship between LUNA and UST, but the latest version of the stablecoin white paper abandons any algorithmic stability mechanism in favor of an overcollateralized model relying entirely on arbitrage incentives on external markets.

According to Tron’s website, its DAO has $2.3 billion in reserves — if the protocol uses a significant amount of reserves to bail out other members of the industry, USDD’s stability could be further threatened, Sortiriou said. 

“If Tron’s stablecoin was to be in jeopardy…it would have huge implications as it’s now grown into quite a significant size, but I don’t think it would be that catastrophic because we’ve already had the collapse of Luna and UST, which was a combined value of $100 billion,” Sotiriou said. “It’s apparent now how algorithm stablecoins can’t be fully trusted.” 

Sun’s offer comes as Bankman-Fried continues to dish out cash to help struggling sectors of the crypto industry as the aftermath of the collapse of Three Arrows Capital and Celsius’ insolvency struggles. 

FTX agreed to acquire Bitvo and Embed Financial, and the exchange extended a $250 million credit line to BlockFi. Alameda Research, founded by Bankman-Fried, loaned $500 million to Voyager.

Reports suggest FTX also aims to acquire Robinhood, although Bankman-Fried, who personally acquired a 7.6% stake in the investing app in May, has denied these claims.

Sun did not immediately respond to Blockworks’ request for comment.

Correction, July 12, 2022 at 8:26 am ET: USDD does not use an algorithmic stability mechanism like TerraUSD did.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow

article-image

Ondo Finance’s acquisition of blockchain development company Strangelove follows its buy of Oasis Pro

article-image

Cryptocurrency and stock traders alike had a lot to unpack Wednesday