- First Digital Trust has filed a defamation claim against Justin Sun in Hong Kong‘s High Court following his public accusations of insolvency.
- The company’s FDUSD stablecoin briefly de-pegged on April 3 after Sun’s allegations but has since recovered.
- First Digital Trust is seeking injunctions to prevent further statements from Sun and to require him to publish retractions.
Hong Kong-based custodian First Digital Trust has initiated defamation proceedings against Justin Sun, founder of the Tron blockchain, after he publicly claimed the company was insolvent. The writ of summons was filed in the Hong Kong High Court last week, marking the first step in what could become a significant legal battle in the cryptocurrency sector.
First Digital’s FDUSD stablecoin temporarily lost its peg to the US dollar on April 3 following Sun’s insolvency allegations on social media platform X (formerly Twitter). According to Sun’s original post, he claimed the company couldn’t meet its financial obligations. However, CoinDesk markets data shows the stablecoin has since virtually recovered its dollar peg.
Legal Action and Requested Remedies
The court filing requests that the Hong Kong High Court issue an injunction restraining Sun from making further statements on the matter. Additionally, First Digital Trust is seeking an order requiring Sun to publish retractions of his previous claims. The company is also pursuing damages for “unlawful interference with the Plaintiff’s contractual and business relationships” and for causing damage to its business operations, though the filing doesn’t specify the monetary amount sought.
Despite the legal action, Sun has doubled down on his allegations. He held a press conference in Hong Kong last week where he accused First Digital of fraud and called on local regulators to reform rules around trusts.
Response and Current Status
First Digital has publicly refuted Sun’s claims by posting examples of successful redemptions on its social media channels, attempting to demonstrate its solvency and operational stability.
Sun appears undeterred by the legal proceedings. In a post on X, he stated that he “welcomes any legal process.” When contacted about the matter, a spokesperson for Sun declined to comment.
The case, filed under reference number HCA 680 in Hong Kong’s High Court, has not yet had an initial hearing date set. This legal dispute highlights the significant impact that public statements by high-profile figures can have on digital asset markets, particularly for stablecoins where confidence is paramount for maintaining their value.
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