Tron founder Justin Sun accuses First Digital Trust (FDT) of severe financial misconduct

FDUSD, a stablecoin from Hong Kong’s First Digital, recently dropped below its $1 peg due to concerns over its reserves

Tron founder Justin Sun has publicly accused First Digital Trust (FDT), a Hong Kong-based financial institution, of severe financial misconduct.

The stablecoin FDUSD, issued by First Digital in Hong Kong, dropped below its $1 peg on Monday amid concerns over its reserves. It fell to as low as $0.87 against USDT and $0.76 against USDC, before rebounding to trade around $0.98–$0.96.

Sun Claims FDT Is Financially Insolvent

The value of FDUSD’s dropped after reports that TrueUSD’s reserves were reportedly stuck in illiquid assets.

According to a report by The Block, Justin Sun claimed that First Digital Trust (FDT), which manages these reserves, is insolvent and urged users to secure their funds.

However, FDT has denied these claims, saying that it’s fully solvent and its assets are safe. They also plan to take legal action to defend their reputation.

In a latest X post, Justin Sun shares a screenshot of First Digital Trust’s financial statement, revealing the company has had negative equity for three years.

According to Sun, FDT is financially insolvent, with its liabilities exceeding its assets for three consecutive years, ending 2024 with a negative HK$100 million. To make matters worse, the company is reportedly tied to significant losses from the alleged misappropriation of user assets.

Is It A Mockery Of Law?

He highlighted that despite this, FDT has allegedly misappropriated user assets and is still raising billions in public funds. “FDT’s very existence at this very moment is a mockery of the rule of law in Hong Kong,” Sun remarked.

Sun also went public with his accusations, live-streaming a statement on Tuesday evening. In his statement, Sun claimed to uncover a major international financial fraud involving both traditional finance and Web3 platforms.

He criticized Hong Kong’s financial regulations, saying that loopholes allowed the fraud to happen.

He also questioned how Hong Kong regulators and law enforcement could allow this situation to persist, suggesting that it undermines the rule of law in the region.