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TRON founder Justin Sun has intensified his accusations against First Digital Trust, claiming serious misconduct that surpasses the infamous FTX debacle.
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He alleges that FDT has misappropriated client funds worth $500 million, far exceeding the known mismanagement seen with FTX.
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Sun asserts that unlike FTX, which at least created an illusion of structure, FDT blatantly siphoned off user assets with no consent.
Justin Sun demands action against First Digital Trust for alleged misconduct likened to the FTX crisis, calling for regulatory intervention and investigations.
Justin Sun Compares First Digital Trust to FTX
Sun criticized First Digital Trust (FDT), the issuer of the FDUSD stablecoin, arguing that their practices reflect a severe breach of trust. He emphasized that while FTX mismanaged its user funds, it at least maintained the appearance of a structured financial operation, albeit misleadingly.
Serious Allegations Against FDT’s Practices
According to Sun, FDT’s actions exemplify a fundamental violation of user trust, as he reported that the entity allegedly diverted around $456 million from TUSD custodial funds without any client authorization. This withdrawal was reportedly recorded as loans to a dubious entity in Dubai, lacking any collateral.
“FDT simply siphoned off $456m from TUSD’s custodial funds without client authorization or knowledge, and booked as loans to a dubious third party Dubai company without any collaterals,” Sun stated. This stark discrepancy in user asset management has raised alarms within the cryptocurrency community.
In contrast to FTX’s approach, which involved investing misappropriated funds in companies like Robinhood and AI startup Anthropic, Sun claims that FDT’s allocations were merely for personal enrichment. He expressed concern that FDT’s CEO, Vincent Chok Zhuo, has shown no urgency to address these allegations.
“Vincent Chok has acted deceptively and maliciously, pretending nothing happened when exposed,” Sun stated, further emphasizing the negligence in the leadership at FDT compared to the actions taken by the now-convicted founder of FTX, Sam Bankman-Fried.
Urgent Call for Regulatory Action in Hong Kong
With the gravity of the allegations weighing heavily, Sun is urging the Hong Kong authorities to act decisively in addressing the issues surrounding FDT. Comparing the situation to the regulatory response seen during the FTX fallout, he stresses the necessity for immediate action to safeguard Hong Kong’s integrity as a leading financial hub. “Hong Kong must act like its US counterparts—swiftly, decisively, and effectively,” he remarked during public statements.
Furthermore, to aid authorities and promote transparency, Sun has initiated a $50 million bounty program aimed at uncovering information about FDT’s alleged fraudulent activities. Following this, he has also engaged in discussions with Hong Kong lawmaker Johnny Wu about potential regulatory measures to prevent further violations.
Conclusion
As the crypto landscape continues to evolve, Justin Sun’s claims against First Digital Trust depict a concerning scenario reminiscent of past financial mishandlings. With increasing scrutiny on regulatory frameworks, the actions taken by Hong Kong authorities in the coming weeks will be crucial to restoring confidence in the sector. Ensuring rigorous oversight can mitigate risks and protect investors from potential fraud.
