Justin Sun, founder of Tron, has recently made serious allegations against First Digital Trust (FDT), a custodian based in Hong Kong. According to Sun, FDT has misused over $500 million in TUSD assets through unauthorized transactions and concealed transfers.
In a detailed social media post on April 8, Sun outlined seven alleged breaches of law and fiduciary duty by FDT. He accused the custodian of diverting client funds to ARIA DMCC without proper consent, violating Hong Kong’s regulations on client money handling. Sun also claimed that FDT engaged in unlicensed investment activities through entities like ARIA, TrueCoin, and Crossbridge/Finaport, bypassing regulatory oversight and offering no transparency to clients.
Furthermore, Sun alleged that FDT falsified records to cover up the misallocation of client assets, potentially violating Hong Kong’s Theft Ordinance. He also raised concerns about money laundering through offshore structures and undisclosed commissions, which could trigger an investigation by the Independent Commission Against Corruption.
To address these issues, Sun launched a $50 million bounty program to recover the allegedly misappropriated TUSD funds. Whistleblowers are encouraged to submit leads through a dedicated portal, with rewards contingent on verified recovery outcomes. Sun emphasized that this initiative is not just about money but about seeking justice for the affected parties.
Comparing the FDT situation to the FTX collapse, Sun highlighted the lack of structure, collateral, and transparency in FDT’s actions. While FTX framed misuse of funds as collateralized loans, FDT allegedly moved funds offshore without proper disclosures.
If the allegations against FDT are proven true, the custodian and individuals involved could face criminal prosecution, civil liability, regulatory penalties, and the permanent loss of their license. The case raises broader questions about regulatory accountability in Hong Kong and the importance of safeguarding client assets in the digital asset industry.
In conclusion, Justin Sun’s accusations against First Digital Trust underscore the need for transparency, compliance with regulations, and ethical conduct in the custodial and investment sectors. By shedding light on potential misconduct, Sun aims to protect investors and uphold the integrity of the financial system.