Justin Sun: How Techteryx was Defrauded of US$500 Million?

This interview was conducted with Justin Sun on November 27, following the Press Conference held in Hong Kong regarding TrueUSD (TUSD) judicial progress . The discussion revolves around the misappropriation of US$500 million in TUSD reserve assets. The conversation covers Hong Kong trust company First Digital Trust (FDT), Dubai-related entity Aria, and its controllers. Sun’s side details how funds were improperly transferred from Hong Kong trust accounts to private companies which are related, how documents were forged, the existence of two sets of book records, and the chain of kickback. Sun believes Hong Kong’s trust system has regulatory loopholes, and the proceedings are progressing slowly in Hong Kong. He also explains why the Dubai International Financial Centre (DIFC) courts issued a worldwide freezing order within five months. The interview also touches on the current status of fund tracing, probability of fund recovery, legal strategies, and the broader warning this case poses for the industry.

Previously, during the briefing, Justin Sun accused FDT of transferring nearly US$500 million in TUSD reserves to overseas private companies without authorization and forging transaction documents to conceal the transfers. He stated that the funds should have been held under a licensed Cayman fund but were instead funneled into Aria Commodities DMCC (Aria DMCC) and other offshore structures with no redemption capacity — highlighting severe regulatory gaps in Hong Kong’s trust and TCSP framework, which allows trust companies to move client assets without verifying the legitimacy of the investment entities.

He emphasized that the DIFC Courts’ Digital Economy Court had issued a worldwide freezing order on “a serious issue to be tried” basis, creating external pressure on the case and underscoring weaknesses in Hong Kong’s custodial regulation. Sun denied FDT’s claim that it “acted under instruction”, asserting that they have evidence of documents being forged. He criticized FDT for attempting to block him via injunction from disclosing the facts. Looking forward, he also expects further developments by the end of this year.

In response, FDT issued an official statement claiming that the allegations constitute false representations and defamation against the company and its management. FDT stated that it has systematically preserved evidence regarding Justin Sun’s social media statements and reserves the right to pursue all legal remedies.

Disclaimer: The content of this article reflects only the personal views of the interviewees and not those of WuBlockchain.

Overview of the Case: TUSD Funds, Hong Kong Trust Operations, and Hidden Risks

Colin: Let me briefly summarize my understanding of this case. Essentially, Techteryx entrusted around US$500 million of the stablecoin TUSD reserve assets to FDT to be managed by this Hong Kong trust company. Then FDT transferred the money to a Dubai fund manager, and that fund manager subsequently transferred the funds to another company — Aria DMCC — controlled by the manager’s wife?

Steve: There is no fund management company in Dubai. FDT directly transferred the money to a private company controlled by the wife of the Aria fund’s controller.

Colin: So the current situation is that you want Aria DMCC to return the funds, but they refused. As a result, you applied for a freezing order, and now everything has been frozen. Is the next step to wait for the Dubai court to rule on whether that money should be returned to you, or otherwise?

Justin: The situation is a bit more complicated than that. Let me explain briefly, and Steve can add details. TUSD funds were entrusted to FDT for “trust management,” but Hong Kong’s trust system isn’t what most people think — it’s not like European / American trust structures. The use of the term “trust” in Hong Kong is somewhat misleading. I personally think the Hong Kong trust structure is essentially a mechanism for opening bank accounts.

Many leading banks in Hong Kong do not open accounts for many customers in consideration of risk controls, so trust companies emerged to fill this gap. A trust company opens a bank account, then allows their customers to open the trust sub-accounts under it. By this way, the trust company acts like a broker, allowing clients to transfer and receive funds through these trust accounts. Techteryx opened such a trust account and transferred the funds to the trust company.

But this case shows exactly where the industry needs to pay attention. Hong Kong trust companies are essentially brokers. For example, when you trade on Robinhood, the actual execution is done by Interactive Brokers. If Robinhood were fake, they could take your deposit, show you a simulated interface for you to trade, and the money would have been misappropriated long ago. The key point is: once you deposit into their account, the linkage between you and the actual asset is decoupled.

Hong Kong trust companies are brokers in essence, but in the context of Hong Kong law, they are the trust asset holders. This means they can directly transfer funds to accounts they designate. And importantly, in this case, FDT didn’t even transfer TUSD assets to the Aria fund — it went to a private company with no fund license whatsoever.

FDT and Aria Forged Transfer Documents

Colin: But here’s the core issue: FDT claims that the money was transferred according to instructions from Techteryx.

Justin: No. First, Techteryx never instructed FDT to transfer money to Aria DMCC. The documents Aria disclosed were created after they had already moved the funds, when they realized they were about to be exposed. These documents were fabricated. Court filings explicitly state the documents were “backdated” and “created”.

Techteryx also explicitly told FDT that any transfers must be made only to a licensed Cayman fund called Aria Commodity Finance Fund (ACFF), and absolutely never to any personal account. This was a strict and non-negotiable rule.

Two points to emphasize:

1. They forged transfer documents after they were exposed.

2. Even in the forged paperwork claiming the funds went to a “fund”, the actual receiving entity was a private company with no licensing or qualifications.

Long Litigation Cycles in Hong Kong: 3–5 Years Typical for Cross-Border Fraud

Colin: You’ve been suing FDT in Hong Kong for quite some time. If you have clear evidence they forged the documents, shouldn’t the court be able to make judgement easily?

Steve: On top of that, fraud cases in Hong Kong court generally take a long time,usually 3 to 5 years. Especially for cross-border cases involving multiple jurisdictions like this one, a duration of 3 to 5 years is roughly an average. We are now entering the second year, and next year will be the third year. Current hearing schedules already stretch into next year.

Investigation Focus: Whether FDT and Aria Profited, Kickback Chain, Fraud Evidence

Colin: Do you have evidence that FDT and Dubai’s Aria DMCC gained anything from this?

Justin: Yes. While we don’t yet have all the evidence (since we are still investigating), it has been clearly evidenced that on the same day the monies were transferred, Aria paid a US$14 million kickback to Glass Door, a secret entity jointly controlled by Yai who is the person in charge of Finaport and FDT.

Of course, I personally don’t believe the US$14 million kickback represents their entire profit from that US$400+ million, but this US$14 million kickback is sufficient to prove their crime, and the amount itself is extremely enormous. That’s why I mentioned at the press conference this year that I personally consider it as crucial evidence.

Actual Investment Flows of the US$400M+ and FTX-like Fraud Model

Colin: After this money was transferred, which specific sectors did the US$400+ million actually get invested into? Do you have relevant data? Have you already figured that out?

Steve: In fact, they kept two sets of books, effectively falsifying the accounts on paper. On the one hand, they claimed on the books that the funds were invested into some very strange projects mentioned at today’s press conference — basically fictional, made-up projects. That’s the first set of books. But there is no corresponding bank statements to prove the money actually went there. The bank statements show that the actual flow of funds has nothing to do with those projects.

In other words, they were falsifying things on two levels at the same time: first, the projects themselves were fabricated “investment projects”; second, the real cash flows were diverted elsewhere, including tens of millions going into that British individual’s personal accounts. From these two levels, the whole affair plays out like “Mission: Impossible” — it is all fake from start to finish. Justin: Personally, I don’t think we need to dramatize it as “Mission: Impossible”. FTX used a very similar fraud model back then. When people look back on the FTX scam, they also ask: where did FTX’s money actually go? FTX also played the two-sets-of-books game. If you’re an outsider and let them lead you around, you may get fooled by the surface story — that all user funds were in Serum, MAPS, and FTT tokens.

They’ll say, for example, if they misappropriated US$10 billion of user funds, but their holdings of Serum, MAPS, and FTT have a combined market value of more than US$10 billion, so “all the money went into these tokens”. If a judge or law enforcement officer doesn’t really have much knowledge about this, they might be deceived by them, thinking the numbers match up, and thus believing that FTX is all right.

But a more sophisticated judge will ask a deeper question: how exactly was that US$10 billion misappropriated? You have to see whom Sam actually wired the money to. That’s what really matters. For instance, he might say it’s related to the MAPS token, but in reality, he never actually sent the funds to the MAPS project team. If you follow the trail, you’ll find the money was actually sent to companies like Genesis Block, Anthropic, Robinhood, etc.

So in my view, what’s happening with Aria now is also a “two sets of books” situation. And of course, we will further investigate both sets of books, because all of this belongs to the frozen asset pool.

Dubai Freezing Order: First-Layer Accounts Frozen, Tracing Extends to Second- and Third-Layer Accounts

Colin: Dubai has already frozen the proceeds, right? What exactly has been frozen?

Justin: We obtained a freezing order. After getting that, we have to go to different banks and different institutions to have it enforced, in order to freeze different companies, different equity interests, and different pools of funds.

Colin: What have you managed to freeze so far?

Steve: The first-layer bank accounts directly involved in the case have now all been frozen. But a large portion of the money was quickly “laundereded” into second and third-layer accounts. That’s why we are now applying for and enforcing a worldwide freezing order: after freezing the first-layer accounts, we continue to trace where the money flowed in the second-layer peripheral accounts, then file freezing applications against those accounts layer by layer, and continue tracing down the chain. This is going to be a relatively lengthy process.

Colin: So at the moment, the recovered funds are still quite limited, because most of the money has been scattered across different accounts. Based on your current investigation, roughly how much of the US$400+ million is left? How much do you expect to recover in the end?

Steve: I think since it was related to fiat monies, it’s very hard to completely hide those US$500 million in fiat unless they have literally been burned. So fundamentally this is a matter of time. We believe there is still a chance to recover most of it.

Colin: But didn’t you say they already invested the money into all kinds of messy projects?

Steve: In fact, the funds never went into those “projects”. Those were just fabricated on the books.

Colin: Fabricated?

Justin: Yes. It’s the same trick as when FTX claimed its funds were used to purchase MAPS tokens and Serum tokens.

Steve: Right, totally unrelated. They claimed the funds were invested into those projects, but according to the bank statements, the actual flow of funds has nothing to do with the supposed investment projects.

Justin: It was all transferred to individuals.

FDT’s Role and Kickback Chain Exposed: Why Funds Were Transferred to a Private Company Instead of a Regulated Fund

Colin: Here’s another question: from a legal perspective, you believe FDT bears a certain level of responsibility. But this Dubai freezing order itself has nothing to do with FDT, correct? FDT’s main lawsuit remains in Hong Kong?

Steve: That’s right. Because one of the judge’s key considerations is that, FDT transferred such a large sum of money to that Dubai company without any proper authorization procedures, that alone is a serious issue to be tried. However, Dubai DIFC is not the main trial court. The main trial forum is in Hong Kong. DIFC issued this freezing order after reviewing the evidence and concluding that there are serious hidden issues which must be fully tried by the Hong Kong courts. On that basis, all related assets were frozen to prevent further dissipation. The evidence and reasoning mentioned in the judgment are quite serious.

Justin: The judge has already accepted that this is a coordinated fraudulent conspiracy. As I mentioned earlier today, the court’s freezing order judgment explicitly sets out the kickback chain, including the part paid to FDT, so FDT is one of the origins of the entire conspiracy.

Steve: Yes. The reason this whole thing starts with FDT is because the kickback channel required their cooperation for the system to work.

Justin: The kickbacks were routed through this chain.

Colin: Did FDT participate in the overall court proceedings in DIFC? Why did they not participate? Were they not served with anything?

Steve: No. This freezing order directly targets that private company in Dubai — the most direct fund receiving party.

Colin: Got it. But that private company did participate in this fraudulent conspiracy?

Steve: Yes. That (Dubai) private company conspired with FDT and transferred the funds together. The court documents spell this out very clearly: they chose this path because it allowed them to more smoothly receive secret kickbacks totalling tens of millions of dollars.

Justin: According to the documents they drafted, all funds should have gone to ACFF. Leaving aside whether ACFF was a suitable investment target, it is a fund regulated by the Cayman Islands Monetary Authority.

But perhaps there was a dispute among the members of this fraudulent conspiracy — . One side argued that since everyone was involved in the embezzlement and the funds could be moved around freely, so why bother sending them to a regulated fund? Routing via a regulated fund would slow down the distribution of illicit gains and kickbacks and be less convenient for them.

According to the judgement, at the time Vincent Chok insisted the funds must be sent to an account controlled by Matthew Brittain. Matthew’s view was that even if they intended to “steal”, they should at least have deposited the money in a regulated institution like Minsheng Bank (for example), so it would appear more compliant on the surface. Vincent’s stance, however, was that since they were “stealing” anyway, they might as well “deposit it in a township enterprise” — in other words, a private company — because that makes kickback operations easier. Why? Because routing kickbacks through a private company account is far easier and more opaque than routing them through a regulated fund. These details are all recorded in the court filings.

Colin: And in this case, basically all the assets involved are fiat, right? No crypto?

Justin / Steve: Right, it’s all fiat transfers.

Colin: And this freezing order is also the first worldwide freezing order ever issued by the DIFC Courts’ Digital Economy Court, correct?

Justin: Yes, it’s the first worldwide freezing order.

Colin: That should be quite symbolic. Going forward, you can use this freezing order to freeze all related assets, as long as they are related to this US$500 million, right?

Justin: Yes, they can all be frozen.

Colin: For you, that should count as a very significant victory. The freezing order should have legal effect for banks worldwide, and institutions such as HSBC would also enforce it.

Justin: That’s right. And we believe what’s even more important is that this is not just about enforcing a freezing order — it is the first court decision that establishes key foundational facts recognizing their fraudulent conduct.

Dubai Freezing Order Procedure: Only 5 Months From Filing to Issuing

Colin: Roughly how long did it take in Dubai from the time you filed the lawsuit to the issuing of the freezing order?

Steve: It took about five months in total — around five months.

Colin: That’s indeed quite fast. So why is Hong Kong court procedure so slow? Dubai is clearly moving much faster.

Steve: We feel the same way. The judge handling this case in Dubai has a stellar reputation and is highly regarded within the local judiciary community. The trial was conducted with his great diligence and his reasoning was very robust.

Justin: The entire judgement has more than 400 paragraphs and over 100 pages which is extremely detailed.

Colin: One question: since you sued FDT in Hong Kong a few years ago, why did you only file such an application in Dubai five months ago?

Steve: Here’s what happened: this is actually a stroke of luck. DIFC — the Dubai International Financial Centre — didn’t previously have the mechanism that exists now. The DMCC involved in the case is a private company in Dubai, but our initial lawsuit was filed in Hong Kong. Only in the last one to two years has DIFC explicitly allowed itself to support ongoing foreign litigation by issuing freezing orders, and such judicial assistance process has become a new legal provision. When an applicant already has an ongoing litigation in another jurisdiction(s) (for example, Hong Kong), and the DIFC courts believe the evidence and arguments are solid, they can now assist by granting preservation measures, including worldwide freezing order.

This mechanism was only firmly established in recent years. Once we learned that this new mechanism could apply, we took action immediately.

Justin: At the same time, I also think Hong Kong’s judicial progress is extremely slow, which is one of the key reasons why such fraudsters can still operate so freely. They are exploiting systemic delays and the difficulty of cross-border enforcement.

Disclaimer: In the event of any inconsistency or discrepancy between the English and Chinese versions of this article, the Chinese version shall prevail.