Justin Sun Calls For Hong Kong Trust Reforms After $456M TUSD Fund Scandal

The post Justin Sun Calls For Hong Kong Trust Reforms After $456M TUSD Fund Scandal appeared first on Coinpedia Fintech News

Recently, Tron founder Justin Sun stepped in with emergency funding for TrueUSD (TUSD) after its issuer, Techteryx, faced a $456 million liquidity crisis due to illiquid investments. Though Sun claimed he was just an advisor and not directly involved with TrueUSD, he provided crucial financial support during the crisis.

A heated clash unfolded between Tron founder Justin Sun and First Digital Trust (FDT) over accusations that funds from Techteryx’s TrueUSD reserves were misused. Sun claimed bad actors misused the money, forcing him to step in quietly to save the stablecoin.

Notably, Justin Sun live streamed the event, where he claimed to expose a major international financial fraud involving traditional financial institutions and Web3 platforms in Hong Kong. Sun criticized Hong Kong’s trust regulations, claiming that loopholes allowed the alleged fraud to happen.

“This situation highlights a serious challenge to the integrity of the financial system that must be addressed,” he noted. “I found it hard to believe the scale of fraud orchestrated by a long list of licensed intermediaries.”

A Serious Threat To Financial Integrity

He called the situation a serious threat to financial integrity and suggested avoiding Hong Kong trust companies for now. Sun urged regulators to act decisively to protect the city’s global financial standing. Hong Kong lawmaker Johnny Ng, known as the city’s Web3 advocate, also supported Sun’s concerns, noting reports of similar fraud cases and the need for stronger regulations.

In a recent X post, Justin Sun emphasized the importance of Hong Kong’s financial reputation and user asset security, and expressed his confidence in local authorities to resolve the case and prevent future fraud.

FDT Strikes Back

However, after Justin Sun’s press conference, First Digital Trust (FDT) held its own event to respond to the allegations. CEO Vincent Chok firmly denied any wrongdoing, saying Sun had not provided any solid evidence to support his claims. Chok explained that FDT had followed all its fiduciary duties, acted in the best interests of its clients, and complied with instructions from Sun and his team, which were approved by Techteryx directors. 

He also mentioned that FDT is regularly audited by third-party firms. However, he admitted that he wasn’t aware of the family connection between Aria CFF and Aria DMCC, the companies holding TrueUSD’s reserves.

Chok noted that they’re trying to recover the funds, but delays are due to KYC and AML issues tied to Techteryx’s ultimate owner. He rejected Sun’s claim that FDT can’t process FDUSD redemptions, confirming that the token is still solvent. FDT also plans to sue Sun and shared onchain data showing that redemptions are still processing.