HONG KONG—A tumultuous afternoon in Hong Kong saw a confrontational exchange between prominent stablecoin issuers, Justin Sun, the founder of the Tron blockchain, and First Digital Trust (FDT), a local fiduciary. Both parties held press conferences addressing allegations of fund misappropriation concerning the reserves of TrueUSD, a stablecoin managed by Techteryx.
Justin Sun opted to amplify his claims during his press conference, alleging that TrueUSD’s reserves were “misappropriated by a few bad actors.” He indicated that this prompted him to conduct a discreet bailout of the stablecoin to ensure its viability.
Sun directed criticism at the regulatory framework governing trusts in Hong Kong, asserting that systemic loopholes and inadequate regulations facilitated the alleged misconduct. “This situation highlights a serious challenge to the integrity of the financial system that must be addressed,” he emphasized. He expressed incredulity at the magnitude of the purported fraud that involved a considerable number of licensed intermediaries.
In a stark warning, Sun advised stakeholders to avoid Hong Kong trust companies for the time being and urged regulatory bodies to implement substantial reforms to protect the city’s reputation as a global financial hub.
In support of Sun’s viewpoint, Hong Kong lawmaker Johnny Ng—dubbed the city’s Web3 politician—expressed his awareness of multiple reports this year regarding fraud exploitations within trust companies, acknowledging the pressing need for regulatory enhancements.
First Digital Trust Denies All Allegations
In response, First Digital Trust organized its own virtual event where CEO Vincent Chok refuted Sun’s statements, claiming that Sun had not provided “one solid piece of evidence” to substantiate his accusations.
Chok asserted that FDT has adhered strictly to its fiduciary obligations, acted in the best interests of its clients, and followed protocols established by Sun and his nominees, which were previously approved by Techteryx directors. However, he revealed a lack of awareness regarding a familial connection between Aria CFF and Aria DMCC, the funds involved in the management of TrueUSD’s reserves.
According to a complaint lodged by Techteryx with the Department of Justice, Aria CFF is the designated fund authorized to manage TrueUSD reserves under the authority of Matthew Brittain, whereas Aria DMCC, which is not authorized for such purposes, is controlled by his spouse, Cecilia Brittain.
Chok stated that FDT is actively working to recover funds, although complications arising from know-your-customer (KYC) and anti-money laundering (AML) regulations regarding the ultimate beneficial owner of Techteryx are hindering progress.
Additionally, Chok dismissed allegations made by Sun on social media, stating that First Digital Trust remains capable of fulfilling its redemption obligations concerning the FDUSD stablecoin, which continues to maintain solvency.
FDT has also announced intentions to pursue legal action in response to Sun’s claims, thereby resolving the matter through formal judicial channels. Earlier, the company provided data from on-chain transactions as evidence of ongoing redemptions.
This incident emphasizes the growing tensions and challenges within the stablecoin market, particularly regarding regulatory oversight and transparency, as stakeholders grapple with ensuring trust in digital financial systems.
