Justin Sun Faces Defamation Lawsuit from First Digital Over Insolvency Allegations

Tron founder Justin Sun is facing a defamation lawsuit from Hong Kong-based custodian First Digital Trust after he publicly alleged the firm was insolvent. The accusations, posted on social platform X, caused First Digital’s FDUSD stablecoin to briefly lose its U.S. dollar peg on April 3, though it has since stabilized, according to CoinDesk market data.

First Digital filed a writ of summons in the Hong Kong High Court last week, marking the initial step in its legal action. The firm is seeking a court order to prevent Sun from making further claims and to compel him to issue a public retraction. The lawsuit also demands unspecified damages for alleged unlawful interference with First Digital’s business relationships and reputational harm.

Despite the legal move, Sun has not backed down. He held a press conference in Hong Kong reiterating his claims of insolvency and alleged fraud, while urging local regulators to tighten oversight of trust companies. In response, First Digital has released evidence of successful FDUSD redemptions to reassure users.

A hearing date has not yet been scheduled, and Sun has yet to formally respond to the court. However, he stated on X that he “welcomes any legal process.” A spokesperson for Sun declined to comment further on the lawsuit.

The case, filed under number HCA 680, has drawn significant attention within the crypto and legal communities, highlighting ongoing tensions between blockchain entrepreneurs and traditional financial institutions. As stablecoins play an increasingly vital role in decentralized finance (DeFi), the outcome of this case may influence trust and regulatory approaches in the sector moving forward.