Subpoena and withdrawal of USD Coin stablecoin: how is the Tron (TRX) ecosystem doing?
However, Tron is also popular among the criminal community, which may cause the Tron Foundation organization to run into trouble in the future as crypto market regulation develops if token issuers do not effectively follow regulatory requirements.
USDT blockades and accusations against Tron Foundation and its founder
Many incidents are somehow related to the Tron network, as this blockchain is one of the most popular in terms of the number of transactions with stablecoins such as USDT and USDC.
According to UN officials, Tron blockchain schemes involving stablecoins are popular because of their high speed and irreversibility of transactions. These tokens are often used for money laundering and pig butchering. Organizations such as the Office of Foreign Assets Control (OFAC) identify crypto addresses associated with criminal activity and put them on a so-called SDN list, which issuers of stablecoins like Tether use to block the addresses of identified offenders, discouraging criminal activity.
According to a report by TRM Labs, about half of all illegal crypto transactions in 2023 came from the Tron blockchain. It's worth noting that this fact doesn't make the Tron blockchain itself somehow wrong, as fraudsters and other criminals use virtually any blockchain in their activities, including:
- Bitcoin,
- Ethereum,
- BNB Smart Chain,
- Solana,
- Polygon and many others.
In February, issuer Circle announced it would stop issuing USDC on the Tron blockchain in several stages. The issuer did not officially comment on the reasons for withdrawing USDC from the Tron network; it said the company is "continuously evaluating the suitability of all blockchains" while managing its assets. The statement also mentioned "compliance requirements" possibly related to money laundering. Following Circle issuer USDC's discontinuation of its support for the Tron blockchain, major exchange Binance disabled the ability to deposit and withdraw stablecoin on the network. Nevertheless, Tron remains one of the leading blockchains in terms of the number of transactions with stablecoins.
Tether has not yet made any statements about terminating USDT support on the Tron network, noting that the issuer always retains the option to freeze stablecoins at specific addresses, no matter what network they are on.
Tether (USDT) is known as a centralized stablecoin. In other words, the issuer has complete control over the issuance and movement of USDT tokens through the inherent features of the smart contract. For example, in November, Tether blocked 225 million USDT that turned out to be linked to a criminal syndicate in Southeast Asia. According to Dune Analytics, Tether has already blocked more than $1.2 billion USDT at more than 1,700 addresses.
In March of the same year, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the head of the Tron Foundation, Justin Sun, as well as the organization itself and other related companies, accusing them of illegally selling securities, which the regulator recognized as Tron (TRX) and BitTorrent Token (BTT). According to the regulator, the reason for the lawsuit was Justin Sun's frequent visits to the United States, which gives the SEC the right to legal prosecution. The founder of Tron himself demanded that the regulator dismiss the lawsuit because, according to him, the SEC has no authority to regulate the sale of cryptocurrencies in foreign markets. Tron is far from the only ecosystem attacked by the SEC.
Tron network updates
In February 2024, it became known that the Tron Foundation organization planned to develop its L2 solution to scale the Bitcoin network. Over the past few years, developers have been actively creating L2 networks or sidechains to extend the Bitcoin protocol and its functionality.
The L2 solution being developed by the Tron Foundation will connect crypto assets such as Tron (TRX), Tether (USDT), SUN, BUTT, NFT, and others to both ecosystems using cross-chain protocols. Many such solutions allow transferring assets between blockchain networks, but only a few cross-chain protocols support Tron.
In addition, Tron DAO, an organization associated with the Tron ecosystem, plans to invest in a wallet that supports BRC-20 tokens and ordinals.
In March 2024, the developers launched the Bias update to improve the stability of consensus on the Tron network, optimize blockchain performance, and speed upvote reward calculation. In July of the same year, the team announced plans to launch a solution for free P2P transfers, or, as they are also called, gas-free transactions, which recently appeared in another blockchain — TON. The solution is expected to launch as early as Q4 2024.
Also in August, it became known that the founder of Tron launched the SunPump platform for issuing memcoins, similar to Pump.fun on the Solana blockchain. With SunPump, any user can quickly issue their meme token and create liquidity on a decentralized exchange.
Tron market situation
TRX is still among the top ten most considerable assets by capitalization in the CoinMarketCap ranking. However, over the last few years, it has slightly lost ground to other actively developing cryptocurrencies, such as Solana and TON.
As of August 2024, the TRX cryptocurrency's exchange rate is 50% below its all-time high (ATH) reached in January 2018. Nevertheless, the rate has more than doubled over the past year.
However, in the DeFi segment, the Tron ecosystem is second only to Ethereum regarding the value of locked-in protocols (TVL), which exceeds $8.1 billion despite the small number of protocols. There are only 34 of them. By comparison, Base has almost 10 times more DeFi protocols, and Arbitrum has about 20 times more, but the TVL of these networks is nearly half that of Tron. This indicates the high liquidity of extensive protocols in the Tron ecosystem.
