Hong Kong legislator Johnny Ng has pledged that authorities will respond swiftly if fraud allegations against First Digital Trust (FDT), the issuer of the FDUSD stablecoin, are validated.
In a post on April 3, Ng reassured investors that the city’s cryptocurrency regulatory framework is robust and dedicated to protecting investors, even in light of the recent noteworthy controversy.
He stated:
“Hong Kong has both a solid legal foundation and a conducive environment for safeguarding international investors and the Web3 sector. I encourage international investors and tech professionals not to be deterred by a single incident and to remain confident in their investments and developments in Hong Kong.”
His remarks came after Tron founder Justin Sun accused FDT of mishandling client funds, raising concerns about the potential regulatory weaknesses in the city’s trust company governance.
Ng acknowledged that he has received several complaints this year regarding suspected fraud linked to trust company operations. In light of this, he emphasized the necessity of reviewing and strengthening the regulations that apply to such entities.
He remarked:
“My office and the Anti-Fraud Alliance have indeed received multiple cases this year involving suspected fraud related to trust companies. I believe there is an essential need to discuss improving the regulatory framework for these companies in the future to prevent criminals from exploiting existing loopholes.”
Sun vs. First Digital Trust
On April 2, Sun alleged that FDT was facing insolvency after supposedly misusing nearly $500 million in client assets.
According to Sun, FDT rerouted Techteryx’s TrueUSD (TUSD) reserves, taking advantage of the insufficient regulatory supervision in Hong Kong’s crypto trust industry.
Sun stated:
“This situation highlights significant loopholes in Hong Kong’s trust sector that can be exploited to bypass financial and banking regulations. This presents risks to the public and undermines Hong Kong’s standing as a global financial hub.”
However, FDT has strongly denied the accusations.
In its response, the firm rejected Sun’s assertions as unfounded and unconnected to its FDUSD stablecoin.
FDT explained that the dispute is related to TUSD operations and accused Sun of opting for a public smear strategy instead of seeking legal recourse.
The trust company stated:
“Justin Sun’s unfounded allegations won’t distract from the failures of Techteryx—our stablecoin FDUSD remains fully backed and solvent.”
FDT confirmed it is consulting legal experts and will take measures to protect its business and reputation against what it characterized as a misleading narrative.
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