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Justin Sun warns: Crypto firm 'practically bankrupt'

Justin Sun, founder of the Tron network, warns crypto investors and urges them to withdraw their money from First Digital Trust as soon as possible.

By Mike Hesp
• 2 min read
Justin Sun warns: Crypto firm 'practically bankrupt'

Justin Sun, founder of the Tron network, warns crypto investors and urges them to withdraw their money from First Digital Trust as soon as possible. This company, based in Hong Kong, was appointed by Techteryx, the issuer of the stablecoin TrueUSD (TUSD), as custodian of funds.

After Suns remarks, the FDUSD stablecoin issued by First Digital fell more than 5%, resulting in a loss of over $130 million in market capitalization. The price has largely recovered.

“First Digital Trust (FDT) is effectively bankrupt and cannot make repayments to customers,” Sun on X (formerly Twitter), in response to an article about a lawsuit Techteryx has filed against the company. “I strongly urge users to act immediately to protect their wealth.”

According to the report, Techteryx has filed a lawsuit against Vincent Chok, the CEO of First Digital. The company reportedly poured nearly half a billion dollars of TrueUSD reserves into illiquid investments. Those investments reportedly include loans to commodity projects in emerging markets. This has raised concerns among investors that FDUSD may face the same risk.

In Hong Kong court documents, Techteryx states that between 2023 and early 2024 a $456 million balance sheet shortfall was looming. That financial gap was ultimately plugged by Justin Sun himself.

Sun says: “There are significant gaps in both the Hong Kong trust admission procedures and the internal risk management of the financial system.” He calls on regulators and authorities to act quickly: “Only then can we prevent further large losses.”

First Digital pushed back hard. In a post on X the company states: “First Digital is fully solvent. Every dollar backing FDUSD is fully backed, securely stored, and supported by U.S. Treasuries.” The company calls Sun’s statements a “typical smear campaign” aimed at discrediting a competitor.

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