Justin Sun, founder of Tron, accused First Digital Trust of mishandling client assets, resulting in significant market implications and regulatory scrutiny.
Fraud Allegations and Consequences
On April 4, 2025, Justin Sun accused First Digital Trust (FDT) of fraud in Hong Kong. Sun claimed the firm misappropriated nearly $500 million of client assets, leading to a public exchange of accusations. It is alleged that FDT conducted unauthorized transactions with Techteryx's reserves, prompting increased regulatory scrutiny. The immediate consequence was a dip in confidence in the firm, as the FDUSD stablecoin briefly depegged, falling to $0.87 before recovering. Sun asserts that the trust company operated without the necessary licenses in Hong Kong, complicating legal matters.
Regulatory Attention and TRX Volatility
According to reports, nearly $456 million was misallocated from TUSD reserves into unauthorized investments, drawing parallels to historic financial mismanagement cases. As of now, TRON (TRX) trades at $0.24, reflecting a price change of 2.48% in the last 24 hours and an 8.08% increase over the past 60 days. TRON's market capitalization stands at $22.69 billion, maintaining a market dominance of 0.84%. Trading volume reached $473 million over the past day, despite a decrease of 26.54%.
First Digital Trust's Response
In response to Sun's claims, FDT denied the allegations, deeming them defamatory and promising legal action. CEO Vincent Chok maintained that their stablecoin, FDUSD, is solvent and backed, dismissing the allegations. Regulatory bodies have promised investigations that may affect trust industry regulations in Hong Kong.
The situation surrounding Justin Sun and First Digital Trust highlights vulnerabilities within financial systems, which may lead to stricter regulatory measures within the crypto industry.
