Tron founder Justin Sun has publicly declared the financial insolvency of First Digital Trust (FDT), a fiduciary based in Hong Kong. The issue arose amid unauthorized use of TUSD reserves, calling for regulatory intervention.
Initial Statement by Justin Sun
Justin Sun has publicly announced that First Digital Trust is insolvent and unable to fulfill client fund redemptions. He urged users to secure their assets and highlighted the need for regulatory intervention to prevent further financial fraud in the region.
Consequences of Mismanaged Investments
Legal filings revealed that nearly $456 million in TrueUSD reserves were rendered illiquid due to unauthorized investments. Techteryx, the issuer of TUSD, had entrusted FDT with managing its reserves, but filings claim that the funds were diverted into the Aria Commodity Finance Fund, a Cayman Islands-registered entity.
Legal Fallout
Techteryx's legal filings accuse FDT of misappropriation and fraudulent misrepresentation. However, FDT CEO Vincent Chok has denied any wrongdoing, insisting that the firm followed instructions as directed. Issues surrounding TUSD include the collapse of former banking partner Prime Trust and a 2024 SEC settlement with TrueCoin and TrustToken over misleading investors.
These events highlight the need for strict oversight of financial practices and stablecoin stability. Further regulatory actions will certainly play a critical role in the future of the financial sector in the region.
