Justin Sun Accuses First Digital Trust of $500M Embezzlement, FDT Denies Claims

Sun revealed in an April 3 post on X that he had met with Hong Kong lawmaker Johnny Wu to report the case, submitting relevant materials to regulators and judicial authorities. He described the incident as a significant financial fraud spanning traditional finance and Web3, emphasizing that loopholes in the trust industry were being exploited.

To further highlight the alleged irregularities, Sun hosted a live podcast on the same day, warning that FDT was operating under the guise of a public trust despite being, in his words, “effectively insolvent.” Wu later confirmed he had discussed the case with the complainants and raised the matter in the Legislative Council.

“If the allegations are true, the enforcement authorities will definitely take action to protect the rights and interests of citizens and international investors,”

he stated, while also assuring investors that Hong Kong’s legal system remains robust.

Sun’s accusations, which surfaced on April 2, briefly triggered instability in FDUSD’s peg, causing the stablecoin to dip as low as $0.87. However, it has since recovered, trading at $0.99 according to data from CoinMarketCap.

First Digital Trust has strongly denied Sun’s claims, dismissing them as false and part of a “smear campaign.” The company reiterated that FDUSD remains fully backed on a 1:1 basis with cash and U.S. Treasury bills. 

Additionally, Binance—where the majority of FDUSD supply is held—issued a statement confirming the stablecoin’s reserves. An audit by Prescient Assurance revealed that as of March 1st, FDUSD had $2.05 billion in reserves, consisting of fixed deposits and U.S. Treasuries, which exceeds the amount of FDUSD in circulation. This ensures a 1:1 redemption with USD. Binance emphasizes its commitment to keeping users informed and will continue to provide timely updates through its official channels and announcement board.

FDT has also threatened legal action against Sun, accusing him of spreading misinformation.

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