Justin Sun, the founder of TRON, accused First Digital Trust (FDT), the issuer of FDUSD, of being insolvent and unable to back up its token. Sun appealed to FDT holders, requesting that they withdraw their funds. Sun further pointed out the inconsistencies with the Hong Kong licensing process and risk management, asking for more accountability from authorities. Sun then requested that Hong Kong law enforcement step in and prevent further losses. “First Digital Trust (FDT)”, wrote Justin Sun, “is effectively insolvent and unable to fulfill client fund redemptions. I strongly recommend that users take immediate action to secure their assets. There are significant loopholes in both the trust licensing process in Hong Kong and the internal risk management of its financial system. I urge regulators and law enforcement to take swift action to address these issues and prevent further major losses. Hong Kong’s reputation as a global financial center is at stake, and similar financial fraud incidents must never happen again”. FDT has responded to Sun’s accusations, saying that FDUSD is unrelated to the dispute he is alluding to and that there is no insolvency issue. They further suggested Sun was conducting a smear campaign against a business competitor. FDT claims U.S. Treasury bills back their currency. Sing Tao Daily interviewed Sun on the matter. Sun said that he was shocked when he learned about the situation, not knowing how a financial institution could blatantly take someone’s deposits and spend them elsewhere. He also said that his worldview was shattered after discovering the details. He was further dismayed that such a thing could happen in Hong Kong, a place that aims to be a major financial hub of the world. After reading Sun’s statement, Wintermute, a major crypto holder, withdrew around $30 million in FDUSD from Binance. FDUSD may not have been the primary target of Sun’s statement but could be impacted, especially since investors respect Justin Sun and trust what he says. TRON DAO, a governance organisation supported by Sun, is a major backer of USDD and USDD 2.0. Justin Sun bailed out Techteryx’s TrueUSD stablecoin when half a billion reserves became illiquid. This is when the drama started. In December 2020, Techteryx acquired TrueUSD from TrueCoin and placed its reserves under the management of FDT. TrueCoin continued to run TUSD’s regular operations. Sun stepped in to provide emergency liquidity support, which was structured as a loan. In 2023, TrueCoin terminated its involvement in TUSD, leaving Techteryx in complete control of the stablecoin. Techteryx then quarantined around 400 million TUSD even though the token was not backed up with actual value. Justin Sun has reiterated that he does not work with Techteryx and was merely stepping in to stop a major collapse. Sun reasons that if 5 million global users of Techteryx’s TUSD realised their money was not backed up with real value, a major financial collapse might occur. Sun claims that he got involved with the project to stabilize the crypto market and prevent further problems. Vincent Chok, an FDT executive, however, claims that they conducted an independent evaluation of TUSD under Techteryx’s direction. Matthew Brittain, an Aria Group member, denies any wrongdoing and says that all transactions were transparent.
