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Chinese cryptocurrency entrepreneur Justin Sun Yuchen is urging the Hong Kong government to quickly fix gaps in financial regulations.
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Read more: Crypto boss lent US$460m to Techteryx, accuses First Digital Trust of insolvency
His call for action comes after revealing a "Ponzi scheme" involving a "traditional financial institution" in the city and Web3 platforms.
Sun raised concerns through a post on X, warning that First Digital Trust (FDT) -- a Hong Kong-based custodian appointed to manage TrueUSD (TUSD) reserves -- is not meeting its responsibilities to fulfill client fund redemptions. He strongly advised users to take steps to protect their assets.
In an exclusive interview with Sing Tao Headline -- The Standard's sister publication -- Sun described the incident as "utterly shocking."
The cryptocurrency tycoon has lent US$460 million (around HK$3.6 billion) to help Techteryx, an investment firm behind the stablecoin TUSD, as it could trigger a severe financial crisis if TUSD's 5 million global users find out they could not convert their digital currency into cash.
He urged that the government and financial regulators address the systemic loopholes while emphasizing the necessity to adequately accommodate capital inflow from Web3 companies.
Sun pointed out that Hong Kong attracts investors because of its strong global standing, and if the incident is not being appropriately addressed, it could damage confidence in the city's financial market.
