Controversy Erupts Over Stablecoin Reserves in Hong Kong
HONG KONG—In an intense showdown on Thursday afternoon, the world of stablecoin issuers found itself at the center of a heated debate in Hong Kong. Justin Sun, the visionary founder of the Tron blockchain, confronted First Digital Trust (FDT), a fiduciary entity based in Hong Kong, regarding serious allegations of fund misappropriation tied to the reserves of Techteryx’s TrueUSD. Sun vocally asserted that these reserves were “misappropriated by a few bad actors,” a situation that necessitated his discreet intervention to stabilize the stablecoin.
In a tweet, Sun expressed his concerns, stating, “The integrity of our financial systems is at stake.” He pointed to vulnerabilities within Hong Kong’s regulatory framework surrounding trusts, arguing that existing loopholes and lax regulations enabled such alleged misconduct. “This situation highlights a serious challenge to the integrity of the financial system that must be addressed,” he emphasized during the press conference. “I found it hard to believe the scale of fraud orchestrated by a long list of licensed intermediaries.”
Sun went as far as to advise stakeholders to steer clear of Hong Kong trust companies for the time being, urging regulators to implement decisive measures to uphold the city’s esteemed reputation as a global financial hub. His sentiments found a potential supporter in local lawmaker Johnny Ng, often referred to as the city’s Web3 politician. Ng acknowledged the growing number of fraud reports exploiting trust companies and stressed the urgent need for enhanced regulatory frameworks.
First Digital Trust Responds to Allegations
In response to Sun’s allegations, First Digital Trust swiftly organized its own press conference on X, where CEO Vincent Chok firmly stated that Sun had yet to present “one solid piece of evidence” to substantiate his claims. Chok asserted that FDT has consistently adhered to its fiduciary responsibilities, acted in the best interests of its clients, and complied with instructions from Sun and his nominees, which were duly signed off by Techteryx directors.
However, Chok admitted that he was previously unaware of the familial ties between Aria CFF and Aria DMCC—the funds where TrueUSD’s reserves are currently held up. In a formal complaint to the Department of Justice, Techteryx revealed that Aria CFF, the fund it claims is authorized to manage TrueUSD’s reserves, is overseen by Matthew Brittain. In contrast, Aria DMCC, which Techteryx states is unauthorized, is controlled by his spouse, Cecilia Brittain.
Chok also highlighted that FDT is actively working to recover the funds, but noted that issues related to know-your-customer (KYC) and anti-money laundering (AML) protocols concerning the ultimate beneficial owner of Techteryx are complicating the recovery process. Additionally, he refuted Sun’s claims on X that First Digital Trust is unable to meet the redemption obligations of its FDUSD stablecoin, asserting that the token remains fully solvent. FDT announced plans to pursue legal action against Sun for his allegations. Earlier, the company shared on-chain data demonstrating that redemptions are indeed being processed successfully.
