Tron founder Justin Sun has compared the controversy surrounding First Digital Trust to that of FTX before its collapse but insists the former’s case is “significantly worse.”
The FTX Comparison
Tron blockchain founder Justin Sun has compared First Digital Trust’s (FDT) situation, following its reported “unauthorized” transfer of $456 million from TUSD’s custodial funds, to that of FTX weeks before its collapse. While he described both situations as “extremely serious” and “egregious cases of fraud,” Sun insists FDT’s case is “significantly worse.”
Sun’s latest remarks on the growing controversy, which saw the stablecoin FDUSD briefly depeg, came just days before he launched a $50 million bounty to help recover the alleged stolen TUSD reserves. As reported by Bitcoin.com News, Sun’s allegations have attracted the attention of a Hong Kong lawmaker who promised enforcement action should the claims prove to be true.
For its part, FDT has vehemently refuted Sun’s allegations, including claims that it is insolvent. In its last statement, FDT described the claims as a malicious attempt to damage its reputation and market standing, as well as that of the FDUSD stablecoin. FDT vowed to take legal action. At press time and since April 2, FDUSD’s market value has remained above the $0.99 range.
However, in his April 5 X post, which notes the similarities between the FDT and FTX situations, Sun claimed FTX founder Sam Bankman-Fried (SBF) had packaged misappropriated funds as collateralized loans. To make this appear legitimate, SBF allegedly pledged tokens like FTT and SRM, as well as FTX shares, as security. Explaining why FDT’s case is even worse, Sun said:
In contrast, FDT simply siphoned off $456 million from TUSD’s custodial funds without client authorization or knowledge, and booked them as loans to a dubious third-party Dubai company without any collateral.
The Tron founder claims FDT boss Vincent Chok transferred the funds into what he described as a fraudulent Dubai company, which subsequently laundered the money. Although SBF was subsequently arrested and jailed for his actions, Sun asserts that he, unlike Chok, did not “use [TUSD] funds for personal indulgence.”
According to Sun, the swift action taken by U.S. regulators ensured the perpetrators were punished, which in turn helped to protect the reputation of that country’s financial system. He argues that the FDT controversy is similarly putting Hong Kong’s reputation as a global financial center at stake, hence the need to quickly resolve this.
