One of the most controversial figures in cryptocurrency, Justin Sun, is continually striving to be at the center of chaos. Due to his involvement in dubious activities in the past, he faces constant criticism. Recently, his statements led to a 12% drop in one of the popular stablecoins.
FDUSD Decline
According to documents submitted by Techteryx to the Hong Kong court, the TrueUSD (TUSD) stablecoin had a $456 million shortfall in its reserves from mid-2023 to early 2024. This shortfall stemmed from illiquid investments made without Techteryx’s knowledge or consent, which cannot be recovered.
Although Justin Sun previously stated that he only contributed as an advisor to the project, he provided emergency liquidity support to keep TUSD afloat during the crisis. This support was processed as a loan in court documents. After acquiring TUSD from TrueCoin in 2020, Techteryx worked with First Digital Trust (FDT), a Hong Kong-based institution for reserve management. According to the documents, FDT redirected the $456 million to Aria Commodities DMCC, based in Dubai. The funds were directed here due to instructions for investment in the Cayman Islands-registered Aria Commodity Finance Fund (Aria CFF), managed by Matthew Brittain through Aria Capital Management Ltd, with DMCC reportedly owned by his wife, Cecilia Brittain.
As of July 2023, Techteryx took over all operational control of TUSD and terminated its partnership with TrueCoin. FDT CEO Vincent Chok stated that all transactions were carried out under Techteryx’s instructions and denied any responsibility for the losses.
The FDUSD, issued by First Digital Trust (FDT), experienced a nearly 12% decline today due to recent court documents and Sun’s allegations. The connection between TUSD and FDT is tied to the reserve management services outlined above.
Sun’s recent remarks about the insolvency situation panicked investors.
“First Digital Trust (FDT) is effectively insolvent and cannot meet customer fund redemptions. I strongly advise users to act immediately to secure their assets. There are significant gaps in the trust licensing process and internal risk management of the financial system in Hong Kong. I urge regulatory bodies and law enforcement to act swiftly to address these issues and prevent larger losses. The reputation of Hong Kong as a global financial center is at risk, and such financial fraud incidents should never occur again.”
The FDUSD team countered with a statement asserting that there are no issues.
“Justin Sun’s recent claims against First Digital Trust are completely false. This dispute concerns TUSD, not $FDUSD. First Digital is fully solvent.
Every dollar backing FDUSD is fully accounted for with secure, safe, and U.S.-backed T-Bills. All reserve ISIN numbers are detailed in our audit report and clearly accounted for.
This is a typical smear campaign by Justin Sun attempting to attack a competitor. As we informed CoinDesk, we have yet to have the opportunity to defend ourselves, and instead of allowing the TUSD issue to be addressed in court, Justin has resorted to a coordinated social media effort to damage FDUSD as a commercial competitor. FDT will pursue legal avenues to protect its rights and reputation.”
