“Mockery of the Law”: Justin Sun Exposes First Digital Trust Fraud
Nidhi Kolhapur4 Apr 20252 min read
Tron founder Justin Sun has publicly accused Hong Kong-based financial institution First Digital Trust (FDT) of serious financial misconduct. The allegations have sparked fresh concerns in the crypto world – especially around the stability of FDUSD, a major stablecoin backed by FDT.
What started as a sudden price drop has now escalated into a high-stakes public showdown, with claims of insolvency, misused funds, and even international fraud. As the accusations fly and legal threats loom, many are wondering: how deep does this go?
FDUSD Falls Below $1 Peg
The controversy began when FDUSD, a stablecoin issued by First Digital, dropped below its $1 peg. It fell to $0.87 against USDT and as low as $0.76 against USDC before slightly recovering to trade between $0.96 and $0.98.
This drop happened after reports came out that TrueUSD’s reserves were stuck in hard-to-sell assets. Since FDT manages those reserves, concerns quickly spread about its financial health.
Sun Says FDT Is Insolvent—FDT Pushes Back
Justin Sun claimed that FDT is insolvent and warned users to protect their funds. He said the company’s financial situation has been bad for years, with more debts than assets for three years straight.
FDT denied all of Sun’s claims. The company said it is financially stable, that all assets are safe, and that Sun’s accusations are false. They called it a “smear campaign” and said they plan to take legal action to protect their reputation.
Laying Out Proof
In a recent post on X, Sun shared what he says is a financial statement from FDT. According to the document, the company has had negative equity—meaning its debts are larger than its assets—for three years in a row. By the end of 2024, the reported deficit reached HK$100 million.
Sun also accused FDT of misusing user funds while still trying to raise billions from the public.
“FDT’s very existence at this very moment is a mockery of the rule of law in Hong Kong,” he said.
Sun Livestreams Major Allegations
Taking things further, Sun went live-streamed his accusations. He claimed to have uncovered a large-scale financial fraud involving both traditional finance companies and Web3 platforms.
He also criticized Hong Kong’s financial system, saying loopholes in its regulations allowed this situation to happen. He questioned how local regulators and law enforcement could let it continue, warning that it could damage trust in Hong Kong’s legal and financial systems.
If the numbers hold up, this might be more than just a crypto feud – it could be the crack that reveals a much deeper fault line.
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