Justin Sun, the founder of Tron, has announced that First Digital Trust, a fiduciary based in Hong Kong, is insolvent and cannot meet client withdrawal requests.
In a recent post on X, Sun advised users to act swiftly to protect their assets and called for regulatory measures to thwart further financial misconduct in the region.
His remarks come as court documents disclose that approximately $456 million in TrueUSD stablecoin reserves became illiquid due to unauthorized investments.
Techteryx, which issues TUSD, had relied on FDT for managing its reserves, but reports indicate that the firm diverted funds into the Aria Commodity Finance Fund, registered in the Cayman Islands.
Instead, it’s alleged that the money was improperly directed towards an unapproved entity in Dubai, Aria Commodities DMCC. Sun reportedly extended emergency funding to Techteryx, according to sources.
This situation means that nearly $456 million in TrueUSD reserves has been mishandled, triggering legal actions and raising alarms about the oversight of stablecoins.
Sun highlighted that the financial stability of Hong Kong is at stake, stating, “There are critical flaws in both the trust licensing process in Hong Kong and the internal risk management of its financial infrastructure. I urge regulators and law enforcement to act promptly.”
Legal consequences
Techteryx’s legal documentation accuses FDT of embezzlement and fraudulent misrepresentation. However, FDT’s CEO, Vincent Chok, has denied any misconduct, asserting that the company acted according to the guidance it received.
This controversy emerges amid wider challenges faced by TUSD, including the downfall of its former banking partner Prime Trust and a settlement with the SEC in 2024 involving TrueCoin and TrustToken over misleading representations regarding the stablecoin’s reserves.