First Digital Trust Sues Justin Sun for Defamation Over Insolvency Claims

Key Points:

• Justin Sun is facing a defamation lawsuit from First Digital Trust after he accused the company of being insolvent.

• First Digital's FDUSD stablecoin temporarily lost its peg but has since regained its value following Sun's allegations.

Justin Sun's accusations that Hong Kong-based custodian First Digital Trust is insolvent have led to a defamation lawsuit filed by the company.

Following Sun's claim of insolvency, First Digital's FDUSD stablecoin briefly lost its peg on April 3, although it has since almost fully recovered, according to CoinDesk market data.

The writ of summons, marking the initial step in the defamation lawsuit, was filed late last week. It requests the Hong Kong High Court to issue an injunction preventing Sun from making further statements on the issue and demands that Sun publish retractions.

(Hong Kong High Court)

The lawsuit also seeks a damages award (the amount unspecified) for "unlawful interference with the Plaintiff's contractual and business relationships" and for "causing harm to the Plaintiff's business."

Since Justin Sun's initial claim on X that First Digital was insolvent, the Tron founder has reinforced his allegations, holding a press conference in Hong Kong late last week where he accused the company of fraud and called for regulatory reforms regarding trust rules in the region.

In response, First Digital has provided examples of successful redemptions.

An initial court hearing date has not yet been set, and Sun has not filed a formal response. However, he posted on X that he "welcomes any legal process."

A spokesperson for Sun declined to comment on the matter.

The case number is HCA 680 in Hong Kong's High Court.