First digital trust to sue Justin Sun over insolvency accusations
First Digital Trust is preparing to sue crypto mogul Justin Sun for defamation after he publicly claimed that the Hong Kong-based custodian was “effectively insolvent” and had misappropriated the backing reserves of the TUSD stablecoin.
On April 2, Sun warned customers to redeem their funds, triggering a nearly 10% depegging of the FDUSD stablecoin shortly thereafter. In response, First Digital filed an injunction with the Hong Kong High Court aimed at stopping further defamatory statements and securing a retraction of the damaging remarks, reports The Block.
Custodian role and investment dispute
First Digital CEO Vincent Chok stressed that the firm acted solely as a custodian, executing clients’ written instructions rather than serving as a fiduciary with a duty to act in its clients’ best interests. “We are not asset managers, and we don’t claim to be,” Chok said, explaining that the company was specifically hired by Techteryx, the parent of TrueCoin and former overseer of TUSD reserves, to manage investments. One notable decision under dispute involved directing TUSD reserves toward the Aria Fund—an asset manager licensed by the Monetary Authority of Singapore—and particularly investing in Aria Commodities DMCC in Dubai rather than the Cayman Islands-registered Aria CFF. Chok revealed that these investments were executed under the clear instructions of Alex de Lorraine, CEO and director at Archblock, who managed the stablecoin after its sale to Techteryx.
As the legal battle unfolds, First Digital’s defiant stance and detailed documentation underscore its intent to defend its operational role. Industry observers will be watching closely to see how the case shapes the regulatory and operational landscape for stablecoin custodianship in an increasingly scrutinized crypto space.
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