Justin Sun Claims TrueCoin and FDT Misused $456M in TUSD Funds
Justin Sun, founder of TRON, has accused TrueCoin and First Digital Trust (FDT) of unlawfully transferring $456 million in TrueUSD (TUSD) reserves to a private company in Dubai. Sun made the allegations during a recent livestream, claiming the funds were moved using falsified documents and unauthorized transactions.
Justin Sun Claims TrueCoin and FDT Misused $456M in TUSD Funds. Source: CoinChapter
Allegations of Financial Misconduct
According to Sun, the misappropriated funds were transferred to a Dubai-based entity fully owned by the wife of a former Cayman Islands fund investment manager. He further alleged that Vincent Chok, CEO and Director of both FDT and Legacy Trust, directly approved these transactions, calling them a “blatant violation of fiduciary duties.”
Legal documents indicate that Techteryx, the owner of TUSD, had appointed FDT to manage the stablecoin’s reserves. Under this arrangement, FDT was instructed to invest the reserves in the Aria Commodity Finance Fund (Aria CFF), a Cayman Islands-registered entity. However, approximately $456 million was allegedly redirected to Aria Commodities DMCC, a Dubai-based firm specializing in trade finance and commodity trading, without proper authorization.
TUSD Liquidity Crisis and Emergency Response
The alleged unauthorized transfers triggered a liquidity crisis for TUSD. In response, Sun reportedly provided emergency funding to stabilize the stablecoin, ensuring continued retail redemptions and preventing further market disruption.
FDT has denied any wrongdoing, asserting that it acted in accordance with Techteryx’s instructions and had no role in evaluating investment decisions. CEO Vincent Chok maintained that the company simply served as a fiduciary.
Regulatory and Legal Implications
This controversy follows previous legal issues for TrueCoin and TrustToken. In September 2024, the U.S. Securities and Exchange Commission (SEC) charged both companies with fraud, accusing them of misrepresenting TUSD as fully backed by U.S. dollars while investing reserves in speculative offshore funds. The companies settled the case without admitting or denying fault, agreeing to pay civil penalties and disgorgement.
Sun has called on Hong Kong regulators to take swift action against the involved parties, emphasizing the need to protect users and uphold the integrity of the financial sector.
Market Impact
Despite the allegations, TUSD has maintained its peg to the U.S. dollar, trading at approximately $0.998 as of today. The stablecoin remains under scrutiny as investigations into the transactions unfold.
This developing situation raises concerns over the transparency and governance of stablecoin issuers, underscoring the need for stricter regulatory oversight in the crypto industry.
