Tron’s founder, Justin Sun, has launched legal proceedings against First Digital Trust, the organization responsible for the FDUSD stablecoin, claiming it has misappropriated nearly $500 million in client assets.
In a post on April 3, Sun announced his meeting with Hong Kong lawmaker Johnny Wu to report the allegations and share pertinent information with local regulatory and judicial bodies. The accusations revolve around the management of client funds by FDT, which Sun alleges have been improperly diverted.
Sun characterized the situation as “a significant international financial fraud involving both traditional financial institutions and web3 platforms,” asserting the need to bring to light the “gaps in the trust industry” that are being exploited.
On the same day, Sun hosted a live podcast to further detail what he described as serious discrepancies, cautioning that FDT is essentially insolvent while continuing its operations under the guise of a public trust.
Johnny Wu addressed the issue publicly, confirming his meeting with the complainants and raising the matter in the Legislative Council. “If the allegations are substantiated, law enforcement will certainly take action,” he stated, emphasizing that Hong Kong’s legal framework is robust enough to handle such incidents and that international investors should not be overly concerned about any single occurrence.
Sun’s claims, which surfaced on April 2, resulted in a temporary loss of the dollar peg by First Digital USD (FDUSD), causing it to dip to as low as $0.87. However, as of the latest updates, the stablecoin has regained stability, trading at approximately $0.99. In response to the allegations, FDT has denied all claims, asserting that FDUSD is fully backed 1:1 by cash and U.S. Treasury bills.
FDT labeled Sun’s allegations as “false information” and part of a “smear campaign.” The company announced intentions to pursue legal action to protect its reputation and accused Sun of disseminating misleading information. Binance, which holds a significant portion of the FDUSD supply, confirmed the stablecoin’s 1:1 backing in a recent update, reporting reserves of $2.05 billion as of March 1.