Hong Kong reevaluates crypto trust rules amid Justin Sun’s First Digital Trust allegations

Hong Kong lawmaker Johnny Ng has vowed that authorities will act quickly if fraud allegations against First Digital Trust (FDT), the issuer of the FDUSD stablecoin, are confirmed.

In an April 3 post on X, Ng assured investors that the city’s crypto regulatory framework remains robust and committed to investor protection despite the recent high-profile controversy.

According to him:

“Hong Kong has a legal basis and a healthy environment for protecting international investors and the Web3 industry. I urge international investors and tech practitioners not to worry about a single incident and to feel assured in continuing to invest and develop in Hong Kong.”

His comments follow accusations by Tron founder Justin Sun, who claims FDT mishandled client funds, prompting concerns about regulatory gaps in the city’s trust company oversight.

Ng acknowledged receiving multiple complaints this year involving suspected fraud tied to trust company practices. Considering this, he noted a clear need to review and strengthen the rules governing such firms.

He said:

“My office and the Anti-Fraud Alliance have indeed received more than one case this year involving suspected fraud utilizing the characteristics of trust companies. I believe there is a need to discuss how to improve the regulatory framework for relevant trust companies in the future to prevent criminals from exploiting loopholes for fraud.”

Justin Sun vs. First Digital Trust

On April 2, Sun claimed that FDT faced insolvency after allegedly misappropriating nearly $500 million in client funds.

According to Sun, FDT diverted Techteryx’s TrueUSD (TUSD) reserves by capitalizing on the inadequate regulatory oversight in Hong Kong’s crypto trust sector.

Sun said:

“This case shows that there appear to be clear loopholes in Hong Kong’s trust industry that can be used to circumvent financial and banking regulations. This not only poses risks to the public, but also threatens Hong Kong’s reputation as a global financial center.”

FDT, however, has pushed back firmly against the allegations.

In its response, the company dismissed Sun’s claims as false and unrelated to its FDUSD stablecoin.

FDT clarified that the dispute stems from TUSD operations and accused Sun of avoiding legal avenues in favor of a public smear campaign to damage its reputation.

The trust company stated:

“Justin Sun’s baseless accusations won’t distract from Techteryx’s own failures— our stablecoin FDUSD remains fully backed and solvent.”

FDT confirmed it is seeking legal counsel and will take steps to defend its business and reputation from what it called a misleading narrative.

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