Justin Sun, the founder of TRON, has made serious allegations against First Digital Trust (FDT), a custodian based in Hong Kong. Sun claims that FDT was involved in a $500 million embezzlement scheme. In a detailed tweet, Sun alleged that FDT diverted $456 million intended for investment in a Cayman Islands fund to an unauthorized Dubai-based company. He characterized the fraud as an “address replacement attack” similar to those seen in blockchain hacks, where funds are diverted by deceiving the sender into transferring money to a different address.
Sun accused specific individuals, including FDT’s CEO Vincent Chok, of being involved in the alleged scheme. He claimed that they fraudulently obtained tens of millions of dollars in ill-gotten gains through secret kickbacks. The $456 million that was meant to be invested in a Cayman fund managed by Matthew Brittain was allegedly diverted to Aria Commodities DMCC, controlled by Matthew’s wife. Sun also alleged that Chok directed the transfer of secret kickbacks to a side account in Hong Kong.
In response to Sun’s accusations, First Digital Trust filed a defamation lawsuit against him in Hong Kong’s High Court. The lawsuit seeks an injunction against Sun from repeating his accusations about the company. FDT denied the allegations and claimed full solvency, stating that Sun’s comments were false and damaging to their reputation. This legal action shows FDT’s determination to defend itself against Sun’s public claims and uphold its reputation in the industry.
The conflict between Sun and FDT has had real-world market impacts, particularly on FDUSD, FDT’s stablecoin. After Sun’s initial allegations of insolvency, FDUSD briefly lost its dollar peg but has since recovered and is now trading at $0.9987. Sun also announced plans to launch a $50 million bounty program to recover TUSD reserves after stabilizing TUSD with a capital injection following a reserve crisis. This move by Sun aims to address the financial implications of the alleged embezzlement and protect investors’ interests.
Overall, the accusations and legal actions between Justin Sun and First Digital Trust have created ripple effects in the cryptocurrency market. Sun’s detailed allegations of embezzlement and fraudulent activities have raised concerns about the security and transparency of custodian services in the industry. FDT’s response through a defamation lawsuit reflects their commitment to defending their reputation and integrity in the face of public accusations. The outcome of this legal battle and the impact on the market will be closely watched as the cryptocurrency industry continues to evolve and mature.
