Justin Sun accuses First Digital Trust of embezzling 500 million USD in Hong Kong

On Thursday afternoon in Hong Kong, the confrontation between stablecoin issuers escalated as Justin Sun, the founder of the Tron blockchain, and First Digital Trust (FDT), the Hong Kong-based FDUSD issuer, held a press conference regarding allegations of misuse of TrueUSD reserves by Techteryx.

Sun reaffirmed that the reserve fund of TrueUSD had been seized by “some bad individuals,” forcing him to intervene quietly to salvage the situation of this stablecoin.

🚨 I am exposing a major international financial fraud involving traditional financial institutions and Web3 platforms in Hong Kong, he tweeted.

“"I met with legislator Johnny Ng of the Hong Kong Legislative Council to report the case of First Digital Trust (FDT) misappropriating nearly 500 million USD of client funds. We have submitted documents to the regulatory and judicial authorities, confident that we will recover this amount and those involved will be held legally accountable.”

Sun criticizes the legal loopholes in Hong Kong

At the press conference, Sun criticized the loopholes in Hong Kong’s legal framework regarding trust companies, arguing that the lax management has created conditions for fund abuse to occur.

“This situation poses a serious challenge to the integrity of the financial system, and this needs to be addressed immediately,” Sun emphasized. He also expressed surprise at the scale of the fraud, which involved many licensed financial institutions.

Sun even warned that, in the near future, trust companies in Hong Kong should be avoided altogether. He urged regulators to take decisive action to protect the global financial reputation of the city.

In agreement with Sun, legislator Johnny Ng – known as the “Web3 politician of Hong Kong” – stated that he has received numerous reports of fraud related to trust companies this year and acknowledged that the local management system needs improvement.

First Digital Trust rebuts allegations

Right after Sun’s press conference, First Digital Trust also held an event on X (Twitter). CEO Vincent Chok stated that Sun had not provided “any verifiable evidence” to support his allegations.

Chok affirmed that FDT has fully fulfilled its fiduciary responsibilities, acted in the interest of clients, and complied with directives from Sun as well as relevant parties, which have been approved by the directors of Techteryx. He also emphasized that this company is always subject to third-party audits.

However, Chok admitted that he was previously unaware of the family relationship between Aria CFF and Aria DMCC – the two funds holding the reserves of TUSD.

In the complaint sent to the Department of Justice, Techteryx alleges that Aria CFF, the fund authorized to hold TrueUSD reserves, is managed by Matthew Brittain. Meanwhile, Aria DMCC, the fund that Techteryx claims is not authorized, is controlled by his wife – Cecilia Brittain.

Chok said that FDT is working to recover the trapped funds, but issues related to the customer verification process (KYC) and anti-money laundering (AML) concerning the real owner of Techteryx are causing obstacles.

He also dismissed Sun’s accusation that FDT could not refund the FDUSD stablecoin, asserting that this token remains fully liquid. FDT announced that it will take legal action against Sun’s statements.

Previously, the company had announced on-chain data to prove that the process of exchanging FDUSD was still proceeding normally.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions.

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Thạch Sanh

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