Tron founder Justin Sun has publicly declared that First Digital Trust, a Hong Kong-based fiduciary, is insolvent and unable to fulfill client fund redemptions.

In an X post, Sun urged users to take immediate action to secure their assets and called for regulatory intervention to prevent further financial fraud in the region.

Sun’s statement comes as legal filings reveal that nearly $456 million of TrueUSD stablecoin reserves were rendered illiquid due to unauthorized investments. 

Techteryx, the issuer of TUSD, had entrusted FDT with managing its reserves, but filings claim that the firm diverted funds into the Aria Commodity Finance Fund, a Cayman Islands-registered entity. 

Instead, the money was allegedly funneled into an unauthorized Dubai-based entity, Aria Commodities DMCC. Sun provided emergency funding to Techteryx, according to CoinDesk reporting. 

In other words, nearly $456 million in TrueUSD reserves were mismanaged, prompting legal action and raising concerns about stablecoin oversight.

Sun emphasized that Hong Kong’s financial integrity is at risk, stating, “There are significant loopholes in both the trust licensing process in Hong Kong and the internal risk management of its financial system. I urge regulators and law enforcement to take swift action.”

Legal fallout

Techteryx’s legal filings accuse FDT of misappropriation and fraudulent misrepresentation. However, FDT CEO Vincent Chok has denied any wrongdoing, insisting that the firm followed instructions as directed.

The controversy follows broader issues surrounding TUSD, including the collapse of former banking partner Prime Trust and a 2024 SEC settlement with TrueCoin and TrustToken over misleading investors about the stablecoin’s reserves.