Tron founder Justin Sun has initiated a legal process against First Digital Trust (FDT), the issuer behind the FDUSD stablecoin, accusing it of embezzling nearly $500 million in client funds.
In an April 3 post on X, Sun said he had met with Hong Kong lawmaker Johnny Wu to report the case and submitted related materials to local regulators and judicial authorities. The alleged embezzlement centers on FDT’s handling of client assets, which Sun claims have been misappropriated.
Sun described the incident as “a major international financial fraud involving traditional financial institutions and Web3 platforms,” stating it was time to expose how “loopholes in the trust industry” are being exploited.
On the same day, he hosted a live podcast to further disclose what he called serious irregularities, warning that FDT was effectively insolvent and still operating under the cover of a public trust.
Johnny Wu publicly addressed the case, confirming he met with the complainants and raised the issue in the Legislative Council. “If the allegations are true, enforcement authorities will definitely take action,” he said. Wu also emphasized Hong Kong’s strong legal system, adding, “International investors should not worry about a single incident.”
Sun’s accusations, which began on April 2, briefly caused First Digital USD to lose its dollar peg, dropping as low as $0.87. The stablecoin has since stabilized, trading at $0.99 at press time. In response, First Digital Trust denied all claims and stated that FDUSD remains fully backed 1:1 by cash and U.S. Treasury bills.
FDT dismissed Sun’s claims as “false information” and a “smear campaign.” The company warned it would pursue legal action to protect its name and accused Sun of spreading disinformation. Binance, which holds the majority of FDUSD in circulation, confirmed the stablecoin’s 1:1 backing in a recent update. Its latest attestation showed $2.05 billion in reserves as of March 1.
