TRON founder Justin Sun accuses First Digital Trust (FDT), the issuer of FDUSD stablecoin, of being completely insolvent and unable to fulfill redemption requests. 

Sun made the claim on Wednesday after reports suggested that he bailed out Techteryx’s TrueUSD (TUSD) when $456 million of the stablecoin’s reserve was illiquid. 

For context, FDT manages TUSD’s reserves. As of November 2024, the company managed about $501 million of TrueUSD’s reserves.  

Issues Surrounding TUSD Reserves

Following Techteryx’s acquisition of TUSD from TrueCoin in December 2020, it appointed FDT to manage the stablecoin’s reserves. According to recent court documents, Techteryx instructed FDT to invest the reserve in the Aria Commodity Finance Fund (Aria CFF). 

Instead of investing the reserves in Aria CFF as instructed, court filings claimed that $456 million was improperly diverted to Aria Commodities DMCC, a Dubai-based unauthorized entity. 

According to the court filings, between mid-2022 and early 2023, Techteryx tried to redeem its investment from Aria CFF but received little or no funds back. This prompted Techteryx to assume full operational control of TUSD by July 2023, when TrueCoin terminated its involvement with the stablecoin. 

As part of efforts to continue redemption processes and protect customers from possible fallout, Techteryx isolated 400 million TUSD tokens. 

In its defense, FDT claimed it invested TUSD reserves in Aria CFF based on Techteryx’s instructions, adding that it was not responsible for evaluating the company’s investment strategy. 

Further, it claimed that the delay in redeeming funds was due to AML/KYC concerns regarding Techteryx’s beneficial ownership. 

FDT Responds to Sun’s Claim 

However, Sun accused FDT of being insolvent and unable to redeem the client’s funds. Based on this, the TRON founder advised users to immediately secure their assets from projects linked to FDT to shield themselves from potential losses. 

He emphasized that there are significant loopholes in Hong Kong’s licensing of trusts and urged the relevant authorities to act swiftly to prevent further financial losses. 

Protect users and protect HK

First Digital Trust (FDT) is effectively insolvent and unable to fulfill client fund redemptions. I strongly recommend that users take immediate action to secure their assets. There are significant loopholes in both the trust licensing process in…

— H.E. Justin Sun 🍌 (@justinsuntron) April 2, 2025

In response, FDT issued a separate statement refuting Sun’s claims, noting that his accusations are completely false. The company referred to Sun’s allegations as a smear campaign launched by the Tron founder to attack competitors of his business. 

It emphasized that the dispute only relates to TUSD and not to FDUSD, which it issues. According to First Digital Trust, every dollar backing FDUSD is safe, secure, and backed by U.S. Treasury Bills. 

It threatened to pursue legal action against Sun to protect its reputation and rights. Meanwhile, following the crisis, the price of FDUSD plunged to a low of $0.8811 yesterday. However, the stablecoin is still recovering from the issues, as it was trading at $0.9921 in the hours leading up to press time.