TRON Founder Accuses FDT of Insolvency, Calls for Urgent Action

Justin Sun, the founder of TRON, has publicly accused First Digital Trust (FDT), the issuer of FDUSD, of being insolvent and unable to back up its token. Sun urged FDT holders to withdraw their funds immediately, citing significant loopholes in Hong Kong's trust licensing process and the internal risk management of its financial system. He called on regulators and law enforcement to take swift action to prevent further losses and protect Hong Kong's reputation as a global financial center.

In a statement, Sun emphasized the severity of the situation, stating that FDT is effectively insolvent and unable to fulfill client fund redemptions. He expressed shock and dismay at the situation, highlighting the potential for major financial fraud and the need for greater accountability from authorities. Sun's concerns were echoed by Wintermute, a major crypto holder, who withdrew around $30 million in FDUSD from Binance following Sun's statement.

FDT has responded to Sun's accusations, denying any insolvency issues and suggesting that Sun's statements are part of a smear campaign against a business competitor. FDT claims that FDUSD is backed by U.S. Treasury bills and is unrelated to the dispute. However, Sun's involvement in the TrueUSD stablecoin drama adds complexity to the situation. In December 2020, Techteryx acquired TrueUSD from TrueCoin and placed its reserves under FDT's management. Sun provided emergency liquidity support to prevent a major collapse, but the situation remains contentious.

Sun has reiterated that he does not work with Techteryx and was merely stepping in to stabilize the crypto market. He expressed concern that if global users of Techteryx's TUSD realized their money was not backed up with real value, a major financial collapse might occur. Vincent Chok, an FDT executive, claims that they conducted an independent evaluation of TUSD under Techteryx's direction, while Matthew Brittain, an Aria Group member, denies any wrongdoing and says that all transactions were transparent.

The situation highlights the ongoing challenges and risks in the cryptocurrency market, particularly regarding stablecoins and their backing. Sun's accusations and FDT's response underscore the need for greater transparency, accountability, and regulatory oversight in the industry. As the situation unfolds, it remains to be seen how regulators and law enforcement will address Sun's concerns and protect investors from potential losses.