TRON’s Justin Sun Doubles Down on $500M Embezzlement Accusations Against First Digital Trust

Justin Sun, the founder of TRON, has intensified his accusations against First Digital Trust (FDT), a custodian based in Hong Kong. Sun has published detailed accusations of a $500 million embezzlement scheme.

Justin Sun Claims “Address Replacement Attack” In FDT Case

In a lengthy X tweet, Justin Sun alleged that the FDT diverted $456 million intended for investment in a Cayman Islands fund to an unauthorized Dubai-based company instead.

In his detailed allegations, Justin Sun characterizes the alleged fraud as similar to an “address replacement attack” commonly seen in blockchain hacks. According to Sun, FDT and its partners carefully planned a conspiracy to deceive Techteryx into illegally transferring US$456 million to Aria DMCC. He also mentioned that they disguised it as a legitimate investment in the Aria Commodity Finance Fund (ACFF).

Sun explained that in the traditional financial system, the process of address replacement is more complicated, but in essence it is still a very direct act of theft.

The core of Sun’s accusation is that funds intended for investment in the Cayman Islands-registered mutual fund ACFF were instead transferred to Aria DMCC, a company in Dubai. Sun emphasizes that despite similar names, the two entities are completely different. He compared it to blockchain addresses, where “as long as there is one character different in the address, it is a completely different wallet address.”

Sun Named Individuals And Alleged Kickback Scheme

Sun’s allegations extend to specific individuals he claims were involved in the purported scheme. He names Alex De Lorraine, Vincent Chok (FDT’s CEO), and Yai Sukonthabhund as “co-conspirators” who allegedly “fraudulently obtained at least tens of millions of dollars in ill-gotten gains through secret kickbacks.”

According to Sun, the $456 million was meant to be invested in a Cayman fund managed by Matthew Brittain through Aria Capital Management Ltd. Instead, Sun claims the money was diverted to Aria Commodities DMCC, which he describes as “an entity controlled by Matthew’s wife, Cecilia Brittain.

Sun further alleges that FDT CEO Vincent Chok personally directed the transfer of at least $15.5 million in secret kickbacks from Aria DMCC to a side pocket account in Hong Kong called Glass Door.

On top of his allegations, Sun had also announced plans to launch a $50 million bounty program to recover TUSD reserves. Sun’s $50 million bounty program comes after he intervened to stabilize TUSD with a capital injection following a shocking reserve crisis.

First Digital Trust Reacts with A Defamation Lawsuit

First Digital Trust has reacted to Sun’s accusations by filing a defamation lawsuit against him in Hong Kong’s High Court. The lawsuit asks for an injunction against Sun from repeating its accusations about the company. FDT had also denied Sun’s allegations and claimed full solvency earlier.

The custodian claims that Sun’s allegations relating to its financial position and business practices are false and damaging to its reputation. This legal counter-measure clearly demonstrates FDT’s intent to take a firm stance against Sun’s public comments and FDT’s effort to defend itself in a proper legal proceeding.

The conflict has already had real-world market impacts, specifically on FDUSD, First Digital Trust’s stablecoin. After Sun’s first allegations of insolvency, FDUSD lost its dollar peg for a brief moment. But the stablecoin recovered and is now trading at $0.9987 at the time of writing.