Tron founder Justin Sun has raised doubts about First Digital Trust's financial situation, calling for action from Hong Kong regulators.
Justin Sun's Warning
Justin Sun, the founder of Tron, claimed today that First Digital Trust (FDT) is insolvent and unable to meet client redemptions. Sun urged users to secure their assets and recommended that Hong Kong regulators take action to prevent further issues. He also expressed concerns about Hong Kong's reputation as a financial center, citing weak oversight in trust licensing and risk management.
TUSD Reserve Incident
Sun’s statements followed news that he had previously provided emergency liquidity to Techteryx’s TrueUSD (TUSD) stablecoin. This intervention occurred after $456 million in reserves became trapped in illiquid investments. The reserves were improperly redirected to an unauthorized destination, with FDT being responsible for managing TUSD's reserves.
First Digital Trust's Response
In response to Sun’s claims, First Digital Trust (FDT) denied being insolvent, stating that the dispute concerns TUSD only, and that FDUSD remains fully solvent and backed 1:1 by US Treasury Bills. CEO Vincent Chok refuted all accusations, calling Sun's post a smear campaign against a competitor, and announced plans for legal action to protect their reputation.
Discussions on the financial stability of First Digital Trust highlight the importance of effective risk management and transparency in the cryptocurrency sector. Focus on these issues may impact Hong Kong's reputation as a financial hub and confidence in stablecoins.
