Justin Sun Doubles Down on First Digital Trust Fraud Allegations, Urges H.K. Regulators to Act

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HONG KONG — Justin Sun, the founder of the Tron blockchain and an adviser to TrueUSD issuer Techteryx, returned to the podium in Hong Kong with a more forceful version of allegations he first aired in April, accusing First Digital Trust (FDT), a fiduciary company, and its CEO Vincent Chok of exploiting gaps in the city’s trust company framework to move hundreds of millions of dollars in TUSD reserves offshore.

At a Thursday press conference in the city, Sun alleged the Hong Kong trust company not only rerouted the stablecoin's reserves offshore but also fabricated transaction documents to mask the transfers.

Techteryx acquired TUSD in 2020 and appointed FDT to be the fiduciary responsible for holding and managing the reserves backing the token.

The follow-up press conference comes months after Sun disclosed a liquidity shortfall in TUSD’s reserves and alleged that Hong Kong’s trust regulations let FDT reroute nearly half a billion dollars into illiquid offshore vehicles without authorization, as CoinDesk reported earlier this year.

In court filings, Techteryx claimed the transfers went to Aria Commodities DMCC — not to a fund called Aria CFF, as it initially said it was directed — and were tied up in illiquid commodity and infrastructure deals that could not be redeemed, allegations Aria has denied.

Unauthorized money transfers?

Both Techteryx and Aria agree that the reserves ended up in Aria-linked entities. The dispute centers on whether FDT was authorized to send the funds there and whether it understood the assets would be committed to long-term, illiquid trade-finance projects, which are inappropriate for stablecoin reserves.

Techteryx says it instructed FDT to place reserves only in the Aria Commodity Finance Fund, a Cayman vehicle. FDT denies it diverted the money instead to Aria Commodities DMCC, saying it acted strictly on instructions from Techteryx or its representatives. Aria, for its part, says the assets were placed into term-based financing arrangements consistent with the agreements it believed were in place.

Since the first press conference, Dubai’s Digital Economy Court has issued a worldwide freeze on assets tied to the alleged misappropriation. The ruling does not determine liability and was granted on the basis that there were serious issues to be tried.

The order locks down the assets until Hong Kong courts resolve the dispute, adding external pressure on local regulators to address the custodial practices at the center of the case. The episode has become a test of how Hong Kong regulates trust companies at a time when the city is preparing a stablecoin licensing regime in which custodial controls will be central to investor protection.

All of this raises questions about how Hong Kong’s regulators and law enforcement will respond as the city prepares a stablecoin licensing regime that depends on strong custodial oversight.

Hong Kong lawmakers acknowledge flaws in Trust regime

Critics, like Sun, have called out Hong Kong’s Trust or Company Service Provider (TCSPs) regime, which licenses and oversees non-bank trust companies, for allowing client assets to be moved without the transaction-level safeguards that apply to banks. Under the framework, trust companies are not required to obtain prior regulatory approval for large transfers.

TCSPs are supervised by the Companies Registry rather than financial regulators, and do not face capital requirements or transaction monitoring comparable to banks or licensed securities intermediaries.

“Any owner of the trust can basically transfer their client's assets into any account he want. You can just have one single transaction … and only one person can do that,” Sun said in an interview. “The regulators need to close it immediately.”

Lawmakers in Hong Kong have acknowledged this issue. Legislative Council member Johnny Ng — an advocate for the territory's Web3 sector — said in April that multiple suspected fraud cases involving trust companies had already been reported to his office and that the city needs to strengthen its trust-company regulatory framework.

FDT says it was following directions

FDT maintains it followed Techteryx's directions, denies misappropriating funds and says it does not control Aria’s assets.

Instead, it argues that the money became difficult to retrieve because Aria raised anti-money laundering (AML) and know-your-customer (KYC) concerns about Techteryx’s ownership, not because FDT knowingly placed reserves into illiquid deals.

The Techteryx directions cited by FDT, Sun alleged, were fabricated.

"We have evidence they have been fabricating all the transaction documents,” Sun claimed in an interview with CoinDesk.

In response to a request for comment from CoinDesk, Chok said FDT sought an injunction to restrain the press event because the company is currently suing Sun for defamation.

"[This was to] prevent exactly what happened: unproven and baseless defamatory remarks about FDT," Chok told CoinDesk. "Sun presented no evidence to support his extraordinary claims other than sharing public information about normal proceedings in this saga."

On X, FDT said it welcomes any steps that assist Techteryx in recovering its assets from Aria.

"Our position remains grounded in documented facts and the judicial record. We want to see the funds released and justice done through proper legal process," Chok continued.

Sun said that he expects more developments before the end of the year.