According to ChainCatcher, Justin Sun posted the "Seven Sins" of First Digital Trust (FDT) on social platforms, including: breach of fiduciary duty, misuse of customer funds, unlicensed investment activities, fraud or theft, false reporting or information concealment, violation of anti-money laundering (AML) regulations, and violation of Hong Kong POBO regulations. The specific details are as follows:
Sin 1: Breach of Fiduciary Duty
According to the Hong Kong Trustee Ordinance (Chapter 29), trustees must act with prudence, diligence, and loyalty. Misappropriating customer funds violates Section 4 (reasonable care obligation) and trust principles. Clearly, FDT will bear compensation and damages liability in civil litigation.
Sin 2: Misuse of Customer Funds
The Securities and Futures (Client Money) Rules (Chapter 571) stipulate that custodial funds cannot be used for the custodian's own purposes. Customer assets must be placed in segregated accounts, and unauthorized withdrawals are strictly prohibited. By transferring TUSD funds to ARIA DMCC without proper authorization, FDT will face enforcement actions, including fines, license revocation, or criminal prosecution.
Sin 3: Unlicensed Investment Activities
Although FDT is registered as a Trust or Company Service Provider (TCSP), it has no SFC license to conduct regulated activities on behalf of clients. Its alleged investment activities involving TUSD assets at ARIA directly violate the Securities and Futures Ordinance by engaging in regulated activities without authorization.
Sin 4: Fraud or Theft
Misappropriating funds with the intent to deceive clients constitutes fraud or theft. FDT conspired with accomplices (such as Aria CFF, Truecoin (Alex De Lorraine), Crossbridge/Finaport (Yai Sukonthabhund)) to conceal misappropriation through forged records and claimed false investments.
Sin 5: False Reporting or Information Concealment
To cover up misappropriation or unauthorized transactions, FDT provided false statements and fraudulent documents, claiming that TUSD funds were intact and invested as instructed. This violates Section 300 of the Securities and Futures Ordinance (using fraudulent or deceptive means in securities transactions).
Sin 6: Violation of Anti-Money Laundering (AML) Regulations
By transferring misappropriated funds through complex transactions or offshore accounts to conceal their origin, FDT facilitated and/or constituted violations of anti-money laundering regulations.
Sin 7: Prevention of Bribery Ordinance (POBO)
The Prevention of Bribery Ordinance is the primary regulation in Hong Kong governing secret commissions. It criminalizes corrupt transactions, including agents receiving undisclosed benefits or commissions without the principal's consent. Under Vincent Chok's instructions, FDT/Legacy received secret kickbacks from DMCC in exchange for illegally transferring TUSD custodial funds.
