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- FDT accused of misappropriating significant funds without user awareness.
- Market faces major repercussions, including stablecoin instability.
- Reactions prompt policy review by Hong Kong authorities.
Justin Sun, TRON’s founder, has accused First Digital Trust of misusing $500 million of client funds, causing significant concerns in the cryptocurrency market.
The allegations highlight vulnerabilities in crypto fund management, impacting the FDUSD stablecoin and prompting a call for regulatory review. “FDT and related entities misappropriated $456 million of TUSD statutory reserve funds into unauthorized investments, including transactions with a private company in Dubai,” said Justin Sun, Founder, TRON.
$456 Million Allegedly Misused by First Digital Trust
Justin Sun’s accusations against First Digital Trust (FDT) center on the alleged misappropriation of $456 million, sparking significant concern within the crypto community. Sun asserts that FDT’s leadership, particularly CEO Vincent Chok, operated without necessary user authorization and regulatory backing.
The immediate implications of these serious allegations are clear as reports surface about FDT’s negative net assets. Known liabilities reportedly exceed assets, raising questions about accountability and oversight. Sun suggests the firm conducted unauthorized investments, drawing comparisons to the FTX collapse.
Market reactions have been swift, notably with the FDUSD stablecoin depegging from the US dollar, leading to a significant loss in market cap. High-profile figures, including Hong Kong lawmaker Johnny Ng, have called for a full investigation, while Binance and other market stakeholders express grave concern.
Market Turmoil and Calls for Regulatory Actions
Did you know? FDUSD’s sudden drop to $0.87 this month highlighted vulnerability in stablecoin ecosystems, reminiscent of historical collapses like Luna, reinforcing the need for robust regulatory oversight.
As of April 5, 2025, FTX Token (FTT) traded at $1.00, marking a 3.86% decline over 24 hours and 12.57% across the week, according to CoinMarketCap. The token’s market cap is $329.54 million with a trading volume of $10.21 million, illustrating heightened market volatility.
Coincu research team highlights the need for increased regulatory scrutiny as similar incidents undermine confidence in digital assets. They emphasize the importance of tightening financial controls and governance standards to prevent future occurrences of unregulated fund movements.
