Hong Kong lawmaker Johnny Ng has stated that authorities will act swiftly if fraud allegations against First Digital Trust (FDT) are proven true. Ng reassured investors that Hong Kong’s regulatory framework is strong and committed to protecting investors, despite recent controversies. He urged international investors and tech practitioners to continue investing in Hong Kong, emphasizing the city’s legal basis and healthy environment for the Web3 industry.
Ng acknowledged receiving multiple complaints this year related to suspected fraud involving trust companies, indicating a need to review and strengthen regulations governing such firms. He emphasized the importance of preventing criminals from exploiting loopholes for fraud and proposed discussions on improving the regulatory framework for trust companies in the future.
Tron founder Justin Sun accused FDT of mishandling client funds, alleging that the company had misappropriated nearly $500 million in client funds and faced insolvency. Sun claimed that FDT had capitalized on regulatory gaps in Hong Kong’s crypto trust sector. FDT refuted these allegations, stating that its FDUSD stablecoin remains fully backed and solvent, and accusing Sun of conducting a public smear campaign to damage its reputation.
In response to Sun’s claims, FDT confirmed that the dispute stemmed from Techteryx’s TrueUSD (TUSD) operations, not the FDUSD stablecoin. The company stated that it is seeking legal counsel to defend its business and reputation from what it calls a misleading narrative. FDT emphasized that Justin Sun’s accusations are baseless and aimed at diverting attention from Techteryx’s own failures.
The controversy surrounding FDT highlights concerns about regulatory oversight in Hong Kong’s trust industry and the potential risks posed to investors and the city’s reputation as a global financial center. Ng’s commitment to strengthening regulations for trust companies underscores the government’s efforts to address issues related to fraud and ensure investor protection in the evolving crypto landscape. As the situation continues to unfold, it will be crucial for authorities to take decisive action to maintain trust and confidence in Hong Kong’s financial sector.
