Odaily News Justin Sun released the “Seven Sins” of First Digital Trust (FDT), including:
First offence: Breach of fiduciary duties Under the Trustee Ordinance (Chapter 29), a trustee must act with prudence, diligence and loyalty. Misappropriation of client funds has violated Article 4 (duty of reasonable care) and basic fiduciary principles. FDT will be liable for compensation and recovery in civil proceedings.
The second crime: misuse of client funds. The Securities and Futures (Client Funds) Rules (Chapter 571) clearly stipulate that custodial funds cannot be used by the custodian for its own purposes. Client assets must be stored in isolation and unauthorized withdrawals are strictly prohibited. FDT transferred TUSD funds to ARIA DMCC without proper authorization and has faced intervention by law enforcement agencies, including fines, license revocation, and even criminal prosecution.
The third sin: carrying out regulated activities without a licence
Although FDT is registered as a TCSP company, it does not hold any license issued by the Hong Kong Securities and Futures Commission to conduct regulated activities for its clients. It claims that its TUSD asset investment behavior related to ARIA has directly violated the Securities and Futures Ordinance and is an unlicensed operation.
The fourth crime: fraud or theft. Misappropriation of funds for the purpose of defrauding customers constitutes fraud or theft. FDT joined forces with accomplices such as ARIA CFF, Truecoin (Alex De Lorraine), Crossbridge/Finaport (Yai Sukonthabhund) to conceal the misappropriation and fabricate investments by falsifying records. This is a violation of the Theft Ordinance (Chapter 210) and is a crime of obtaining property by deception or theft, which carries a maximum sentence of 7 years in prison and the need to return the illegal gains.
Fifth crime: False declaration or concealment In order to cover up misappropriation or unauthorized transactions, FDT provided false statements and fraudulent documents, claiming that TUSD funds were intact and had been invested as instructed. This violates Section 300 of the Securities and Futures Ordinance (using fraudulent or misleading means in securities transactions) and if convicted, the maximum sentence is 14 years in prison.
The sixth sin: Violation of anti-money laundering obligations
FDT has allegedly violated anti-money laundering regulations by transferring illegally misappropriated funds through complex transactions or offshore accounts to conceal their origins, and may even constitute an act of assisting money laundering.
Seventh sin: Violation of the Prevention of Bribery Ordinance (POBO)
The Prevention of Bribery Ordinance is the core law in Hong Kong that regulates secret kickbacks. It explicitly prohibits agents from receiving undisclosed benefits or commissions without the consent of the principal. FDT/Legacy, under the instruction of Vincent Chok, accepted secret kickbacks from DMCC, a private company in Dubai, in exchange for illegally misappropriating TUSD escrow funds.