- Tron Founder and First Digital Trust are now embroiled in a legal battle in Hong Kong.
- With business gone sour, both entities want to protect their brands and businesses.
First Digital Trust (FDT), a leading Hong Kong custodian, has filed a defamation lawsuit against Tron founder Justin Sun. The lawsuit centers around an insolvency dispute between Sun and FDT.
Justin Sun’s Accused of Defamation
In an X post, Sun accused the firm of insolvency after transferring over $450 million from its custodial clients to a private company in Dubai. According to Sun, First Digital Trust did receive the transferred funds.
Following Sun’s accusation on April 3, FDT’s stablecoin FDUSD stablecoin briefly lost its peg to the Dollar. While the stablecoin has since recovered, FDT requested an injunction to prevent Sun from publishing “similar words” to statements regarding insolvency.
In addition to his defamation claims, Sun accused FDT of fraud during a press conference in Hong Kong last week. Also, he mentioned that First Digital Trust broke Hong Kong’s securities laws. This aggravated FDT to file the defamation lawsuit against Justin Sun with case number HCA 680 in the High Court of Hong Kong.
In its summons write, First Digital Trust requested the Court to grant an order prohibiting Sun from speaking about the issue in the future. The company also requested an injunction to force Sun to retract his previous statement.
Furthermore, FDT asked that the court issue an award for damages without asking for any amount. FDT said Sun has caused strain on its business and relationships with other organizations.
Sun has not responded to the defamation lawsuit, and his spokesperson has remained silent on the issue. However, the Tron founder shared an X post that he welcomes any legal action that brings more facts into the open.
FDT Reassures Customers
First Digital Trust has denied the allegation that it participated in a coordinated scheme or misappropriation of funds. The firm reassured customers that it remains fully solvent and that FDUSD is still backed 1:1 by cash and other assets.
Before the insolvency claims, Sun and Techteryx, the firm behind the TrueUSD stablecoin, accused FDT of misappropriating TrueUSD reserves. This portion of the reserves, valued at over $500 million, remained inaccessible to TrueUSD for an extended period. It is also the center of a Securities and Exchange Commission (SEC) lawsuit.
However, FDT claimed Sun and Techteryx were trying to shift the blame and avoid their responsibilities to manage TUSD reserves as expected. FDT argued that their suggestion is factually incorrect and a malicious attempt to damage its reputation and market standing.
Meanwhile, as mentioned in our previous post, Sun recently provided emergency financial support to TrueUSD amid a $456 million liquidity crisis. His intervention highlights the importance of robust reserve management and transparency in the global stablecoin market.
Across the Tron ecosystem, Sun recently hinted at a potential launch of a TRX-based Exchange-Traded Fund (ETF). As reviewed in our recent publication, a TRX ETF could boost the coin’s liquidity through the adoption by more institutional investors.
