Justin Sun: "I trusted FDT as a licensed trust company, but... $500 million embezzled"

# Justin Sun Uncovers Financial Mismanagement in FDT's Handling of TUSD Reserves Justin Sun, the founder of Tron(TRX) and influential figure in the cryptocurrency ecosystem, disclosed critical issues surrounding TUSD reserves and First Digital Trust (FDT) during a press conference held on April 3. The revelations have sent shockwaves across the stablecoin industry. Sun explained, “FDT operates as a trustee institution authorized by the Hong Kong government. Considering its credibility, we entrusted the fiat currency reserves backing stablecoin TUSD to FDT.” TUSD is a U.S. dollar-pegged stablecoin that necessitates secure custody of its reserves in banks or trusted institutions to ensure transparency and confidence within the market. Earlier, Sun expressed his intent to expose a significant financial scheme via his Twitter account, stating: _"I’m exposing a major international financial fraud involving traditional financial institutions and Web3 platforms in Hong Kong."_ — H.E. Justin Sun (@justinsuntron), April 3, 2025 # Origins of the Problem: Breach of Trust by FDT According to Sun, the first signs of trouble surfaced in early 2023 when FDT failed to fulfill promised interest payments on the TUSD reserves. Growing mistrust prompted the issuance body of TUSD, *Techteryx*, to form a specialized investigative team. The investigation into FDT spanned an exhaustive period of one year. Sun elaborated, “Through the probe, we uncovered startling evidence of financial misconduct. FDT transferred $500 million of TUSD reserves to a private account in Dubai without prior approval.” # Key Individuals and Oversight Sun also referenced Alexander Lauren, Truecoin’s financial director, who initially recommended FDT as the reserve manager. Despite this endorsement, the unapproved fund movements have raised serious questions about FDT’s management ethics and operational procedures. # Ripple Effects Across the Stablecoin Sector The fallout from this revelation has sparked widespread concern across the stablecoin industry. As details of the unauthorized transfer emerged during the press conference, the incident underscores vulnerabilities in the interplay between traditional financial institutions and blockchain-based ecosystems. The industry now faces heightened scrutiny as stakeholders call for tighter protocols and frameworks to avoid similar incidents in the future. The implications of this case are likely to influence regulatory approaches and investor confidence in stablecoins, including TUSD.