Tron founder Justin Sun has shared that his decision to intervene and save TUSD (TrueUSD) was not an easy one.
By extending a loan to keep TUSD stable, he is personally taking on the risk of $500 million. However, Sun explains that this substantial financial risk was necessary to protect TUSD token holders from significant losses that they would have otherwise faced.
The comments come against the backdrop of the controversy surrounding the trust fraud levied against First Digital Trust by Justin Sun.
First Digital Trust (FDT) is the custodian of the reserves backing TrueUSD (TUSD). In the world of stablecoins, a custodian is a trusted third-party entity that holds the fiat currency reserves (such as US dollars) that are required to back the stablecoin at a 1:1 ratio.
Justin Sun Explains Reason to Extend TUSD Loan
Sun also stated that his actions were essential to shield the broader crypto industry from the potential collateral damage caused by the fallout from FDT’s (First Digital Trust) rug pull, a fraudulent incident that could have further destabilized the market.
Sun stated his hope that justice will ultimately be served, expressing his conviction that those who are at fault will be held accountable.
Additionally, he stated his intention to collaborate closely with Hong Kong Legislative Council member Johnny Ng in order to advance Web3 development and advocate for stricter trust rules.
Also Read: Tron’s Justin Sun Anticipates Influx of New Users, Stablecoin Growth, and Legal Wins for TRX
The First Digital Trust Controversy: What Has Happened?
The head of a Hong Kong government committee on Web3 and digital assets, Johnny Jiezhuang Wu, had stated that lawmakers are investigating serious charges against stablecoin issuer First Digital Trust.
The controversy began when Tron founder Justin Sun revealed allegations that First Digital Trust (FDT) was having financial difficulties, which prompted the probe.
According to him, the corporation has a $500 million trust fund, but it is reportedly unable to pay its bills, raising questions about the safety of its stablecoin, FDUSD. As a result, the stablecoin’s value momentarily declined.
Sun also noted that some people may be abusing Hong Kong’s licensing system to conduct fraud because they don’t understand how it operates. He called for a thorough probe because he thinks this could harm Hong Kong’s standing as a major cryptocurrency hub.
Justin Sun Bails TrueUSD Out of Controversy
Sun has reaffirmed in his latest press conference that TrueUSD’s reserves were “misappropriated by a few bad actors,” which led to him quietly stepping in to rescue the stablecoin.
Sun is committed to making the crypto business more safe and robust by promoting stronger regulatory frameworks that would help avert future occurrences of this kind. Sun’s dedication to the long-term health and expansion of the cryptocurrency ecosystem is demonstrated by this proactive approach.