First Digital Trust counters Justin Sun’s accusations
A significant financial dispute is unfolding between First Digital Trust (FDT) and Justin Sun, founder of Tron (CRYPTO:TRX), over the management of TrueUSD (CRYPTO:TUSD) reserves.
The controversy centers around allegations of misappropriation of nearly $500 million in custodial funds.
Justin Sun has accused FDT of mishandling TUSD reserves by diverting funds to unauthorised entities, specifically Aria Commodities DMCC in Dubai, instead of the intended Cayman Islands fund, Aria CFF.
Sun claims that FDT is insolvent and unable to meet client withdrawals, a claim FDT vehemently denies.
In response, FDT has countered Sun's accusations by stating that the transfers were made at the request of Techteryx, the company behind TUSD.
FDT shared a letter from Techteryx instructing FDT to invest up to $200 million in ARIA commodities, which they claim supports their actions.
This dispute has sparked regulatory scrutiny in Hong Kong, with lawmakers calling for a review of trust company regulations to prevent similar incidents.
Justin Sun has extended a $500 million loan to Techteryx to stabilise TUSD and has offered a $50 million reward for information leading to the recovery of the allegedly misappropriated funds.
The situation highlights concerns about regulatory gaps in Hong Kong's trust industry and the potential risks to public interests.
Despite these allegations, FDT maintains that it remains solvent and capable of meeting client withdrawals.
"This case shows that there appear to be clear loopholes in Hong Kong’s trust industry that can be used to circumvent financial and banking regulations," stated Justin Sun, emphasising the need for regulatory action.
Hong Kong lawmaker Johnny Ng has assured investors that the city's regulatory framework is robust and committed to protecting international investors, urging them not to be deterred by this incident.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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