- Justin Sun deployed $500M to stabilize the TrueUSD stablecoin.
- He blames regulatory loopholes in Hong Kong’s trust system.
- First Digital Trust denies wrongdoing and threatens legal action.
Conflicting narratives emerged Thursday regarding TrueUSD (TUSD) reserves as Tron founder Justin Sun confirmed he provided the $500 million loan following alleged misuse by Hong Kong-based fiduciary First Digital Trust (FDT), while FDT vehemently denied the accusations.
Both parties held separate press conferences addressing the issue.
Sun Claims $500M TUSD Bailout, Blames FDT & HK Regs
In a tweet, Sun stated that he absorbed the risk to protect TUSD holders. “By extending the loan, I am personally absorbing the risk for $500 million,” he wrote. He called the situation a “rug pull” by FDT and claimed his actions prevented wider market fallout.
Furthermore, Sun blamed the weak oversight of local trust companies. He said the alleged fund misappropriation revealed serious flaws in the regulatory system.
“This situation highlights a serious challenge to the integrity of the financial system,” he asserted, warning against using Hong Kong trust firms until regulations improve.
Related: ‘Smear Campaign’: First Digital Responds Forcefully to Justin Sun’s Attacks
FDT Denies Misuse, Cites Instructions from Sun’s Nominees/Techteryx
In response, FDT CEO Vincent Chok denied any wrongdoing during FDT’s press event (streamed on X). He argued Sun lacked “one solid piece of evidence” for his accusations, stating FDT followed fiduciary procedures based on instructions from Sun’s nominees and Techteryx, the TUSD issuer.
Chok acknowledged being unaware of a link between two fund managers who controlled related entities allegedly holding TUSD reserves. He said regulatory processes, including KYC and anti-money laundering checks, are delaying fund recovery efforts.
FDT also reiterated its rejection of Sun’s separate claims that its own stablecoin, FDUSD, is insolvent, confirming redemptions are active and plans legal action against Sun’s public statements.
HK Lawmaker Weighs In; FDT Reaffirms FDUSD Solvency
Meanwhile, Hong Kong lawmaker Ng Kit-chung echoed concerns about trust regulation. He confirmed receiving reports of similar fraud cases and said reforms are needed.
Related: FDT Insolvency Buzz, FDUSD Depeg Stoke Fears: Hong Kong Oversight Questioned
Notably, Sun said he plans to work with Ng to push for better regulation and Web3 policy in Hong Kong. The incident highlights growing concerns over the role of trust companies in crypto finance.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
