First Digital CEO pushes back against Justin Sun’s accusations, says it acted as custodian, not fiduciary

First Digital Trust is preparing to sue Justin Sun for defamation after the crypto mogul claimed the Hong Kong-based custodian is insolvent. The firm has filed an injunction with the Hong Kong High Court to prevent Sun from making future statements and to have him retract his already published accusations. On April 2, Sun alleged that First Digital was “effectively insolvent” and cautioned customers to redeem their funds. That same day, the firm said it was weighing legal action against Sun, who has since said he “welcomes any legal process that brings more facts into the open.”First Digital’s Binance-backed FDUSD stablecoin depegged nearly 10% immediately following Sun’s comments last week.First Digital was employed by TrueUSD’s corporate parent, Techteryx, to manage the stablecoin’s reserves prior to 2024. Although Sun previously distanced himself from the TrueUSD project, last week, he alleged that the firm misappropriated $456 million in TUSD stablecoin assets.In an interview with The Block, First Digital CEO Vincent Chok claimed that the firm was hired purely as a custodian, rather than a fiduciary — an entity entrusted with the legal responsibility of acting in the best interests of its clients — and that they were directed to make particular investments. “In this particular relationship with Techteryx, we are a custodian,” Chok said. “Our role is to take instructions. We have documentation that makes it very clear, whereby the client, in this case, Techteryx and previously Truecoin, gave us specific written instructions to invest in certain underlying investments.”Aria investmentChok noted that the firm invested in Aria Fund, an asset manager licensed by the Monetary Authority of Singapore. In a lawsuit, Techteryx claimed that First Digital improperly directed the TUSD reserves to Dubai-based Aria Commodities DMCC, instead of Cayman Islands-registered fund Aria CFF.According to Chok, these investment decisions were largely directed by Alex de Lorraine, the CEO and director of Archblock, which owns TrueCoin and sold the TUSD stablecoin to Techteryx. Chok claims that de Lorraine was appointed the TUSD asset manager following the sale and “continued to give [First Digital] instructions.”“The communication was mainly with Alex de Lorraine,” Chok said. While Aria was reportedly pitched as an “illiquid” investment, Chok said these moves were made in a low-interest-rate environment. “So I'm sure that he was looking for something a little bit higher return,” Chok said.“We're not asset managers and we don't claim to be,” he added. “And we execute based on written instructions that are signed, executed by the client. So for them to put whatever investments into their stablecoin mandate that's their decision as the issuer.”Chok noted Techteryx was aware of the connection between Aria DMCC and Aria CFF, which are both overseen by a general fund administrator, which “provided evidence through a net asset valuation statement.”“When we invested, based on the instruction, we sent the investment according to the subscription agreement and the banking details sent by Aria,” he added. Sun claims Techteryx made these investment decisions based on false representations of Aria's position."FDT is definitely not just a 'middleman' as it suggested," Sun previously told The Block. Techteryx also claims Chok directed $15.5 million in undisclosed commissions to an entity called "Glass Door" and structured a separate $15 million in unauthorized loans to Aria DMCC that were mischaracterized as "legitimate investments."First Digital and Chok have denied these claims. Sun has also posted a $50 million bounty for insider information related to any instances of alleged embezzlement by FDT.The Block reached out to Sun's team for comment.Insolvency claimsSun previously told The Block that FDT has been insolvent from a balance sheet perspective since 2023. The firm recorded net assets of -101 million Hong Kong dollars (-$13 million) in the fiscal year of 2024, according to financial reports filed to Hong Kong regulators.Chok said it’s “very, very normal to have negative balance” as a trust company. The firm reportedly maintains separate client and corporate balance sheets that are not commingled.“It's a very complex structure due to holdings,” Chok said. “We hold a lot of different entities, but [Sun] used information that is not quite known in the public to make misrepresentations about our financials, which are available publicly. We don’t have something to hide.”Chok noted that the firm successfully "defended" the FDUSD peg and met all withdrawals, adding that each token is backed one-to-one by cash and cash equivalents, including government bonds and repo agreements housed under a separate corporate subsidiary."He's making it sound like everything is all in one," Chok said.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.