Tron founder Justin Sun has launched legal action against First Digital Trust, the issuer of the FDUSD stablecoin, alleging embezzlement of nearly $500 million in client assets.
In a recent post, Sun revealed that he met with a Hong Kong lawmaker to report the case and has provided relevant materials to local regulators and judicial bodies. The allegations focus on the management of client funds by First Digital Trust, which Sun claims have been misappropriated.
Sun characterized the incident as a significant international financial fraud involving traditional financial institutions and web3 platforms, highlighting the vulnerabilities within the trust industry.
He hosted a live podcast on the same day to discuss serious discrepancies he has identified, warning that First Digital Trust was essentially insolvent while operating under the guise of a legitimate public trust.
The lawmaker confirmed that he addressed the situation in the Legislative Council, stating that enforcement authorities would take action if the allegations are substantiated. He reassured international investors regarding the robustness of Hong Kong’s legal framework.
Sun’s allegations, which surfaced in early April, temporarily caused the First Digital USD (FDUSD) to lose its dollar peg, dropping to as low as $0.87; however, it has since recovered and is trading at approximately $0.99. In response, First Digital Trust has denied all accusations, asserting that FDUSD remains fully backed by cash and U.S. Treasury bills, and condemned Sun’s claims as a smear campaign. The company has indicated intentions to pursue legal remedies to protect its reputation, while a major holder of FDUSD confirmed the stablecoin’s backing in a recent financial update.
