- Justin Sun warned users to pull funds from First Digital Trust, calling it insolvent.
- FDUSD dropped nearly 9% after Sun’s post, triggering concern over Binance’s $2.2B exposure.
- Techteryx’s lawsuit reveals $456M in stablecoin reserves were misused in unauthorized, illiquid investments.
Tron founder Justin Sun is raising eyebrows (and possibly red flags) with a bold claim: First Digital Trust, a Hong Kong-based fiduciary, is “effectively insolvent” and can’t fulfill redemptions.
He posted the warning on X (formerly Twitter) Wednesday, tagging an article about Techteryx, the company behind the TrueUSD (TUSD) stablecoin, and its escalating legal battle.
“I strongly recommend that users take immediate action to secure their assets,” Sun wrote.
The fallout? FDUSD, a stablecoin issued by First Digital, plunged nearly 9%, wiping out $130 million in market value before stabilizing slightly—still down about 5% by press time.
First Digital Fires Back
Sun’s post hit hard, but First Digital Trust didn’t take it lying down. They pushed back with their own statement on X, calling the accusations “completely false,” and threatened legal action over what they described as a “smear campaign.”
“This dispute is with TUSD, not FDUSD,” the company said. “First Digital is solvent, and every dollar backing FDUSD is accounted for in U.S.-backed T-bills.”
Why It Matters: Binance Exposure
Crypto folks are watching this closely—Binance alone holds over $2.2 billion in FDUSD, much of it tied to user deposits. And as Coinbase’s Conor Grogan noted, the BTC/FDUSD trading pair is the most active on Binance.
If FDUSD falters? It could rattle a huge chunk of crypto liquidity.
So What’s the Lawsuit About?
The mess stems from Techteryx, which acquired TrueUSD in 2020 and hired First Digital to manage its reserves. But according to court filings in Hong Kong, nearly $456 million in reserves ended up tangled in illiquid, unauthorized investments.
Instead of going into a registered Cayman Islands fund, the money allegedly got funneled into a Dubai-based firm called Aria Commodities DMCC—which then sunk it into high-risk stuff like mining projects and renewable energy ventures.
When Techteryx tried to pull the funds out between mid-2022 and 2023, redemptions failed, and Sun reportedly stepped in to backstop the stablecoin, per CoinDesk.
Shady Loans, Missing Millions?
It gets murkier. Court documents claim First Digital’s CEO, Vincent Chok, directed $15.5 million in hidden commissions to a firm called Glass Door and arranged another $15 million in unauthorized loans to Aria DMCC. Techteryx is calling it misappropriation and money laundering.
Chok denied it all, telling CoinDesk his firm acted on Techteryx’s instructions and that delays came from AML concerns tied to Techteryx’s ownership.
Meanwhile, Aria’s boss, Matthew Brittain, also denied wrongdoing—saying the investment terms were clear and that the fund was never meant to serve as stablecoin reserve storage anyway.
SEC Already Got Involved
Oh, and earlier? TrueCoin and TrustToken, the original issuers of TUSD, settled with the SEC in September for misleading investors. They were accused of claiming TUSD was fully backed by dollars while secretly investing reserves offshore. No admission of guilt, but they coughed up over $500K in penalties and profits.
Sun’s Not Done
Justin Sun promised to drop more details during a press conference on Thursday. His message? This isn’t just a crypto issue—it’s a shot at Hong Kong’s global financial credibility.
“Hong Kong’s reputation is at stake,” he said. “This can’t happen again.”
