The TUSD Reserve Controversy: What Justin Sun's $500M Allegation Reveals About Stablecoin Custody

The crypto community is grappling with a major custody dispute centered on TUSD, one of the market’s prominent stablecoins. Justin Sun has publicly claimed that approximately $500 million in reserves backing TUSD were improperly transferred to Aria DMCC, a Dubai-based entity lacking regulatory oversight, by custodian First Digital Trust (FDT).

The Core Allegation and Timeline

During a November 27, 2025 press briefing, Justin Sun outlined his version of events: FDT allegedly orchestrated the movement of nearly half a billion dollars in TUSD holdings to an unregulated intermediary without proper authorization or transparency. According to Sun’s account, the entity attempted to cover its tracks by producing falsified documentation, a claim that suggests deliberate concealment rather than administrative error.

Legal Proceedings and Rapid Court Action

What stands out in this dispute is the unprecedented speed of the legal response. The Dubai DIFC court moved remarkably fast, issuing a global asset freeze order within just five months—a timeline that starkly contrasts with typical jurisdictions like Hong Kong, where similar proceedings routinely stretch to 3–5 years. This expedited action signals the court’s assessment of the urgency and potential merit of the claims.

The Broader Picture: Fraudulent Infrastructure

The investigation reportedly uncovered layers of complexity beyond the initial transfer: fabricated investment documentation, multiple money movement pathways, and what appears to be a coordinated scheme designed to obfuscate the true destination and purpose of the funds. This isn’t merely a accounting discrepancy but suggests intentional fraud infrastructure.

FDT’s Response and the Path Forward

First Digital Trust has firmly rejected these accusations, issuing a statement that characterizes the allegations as defamatory. The divergence between Justin Sun’s public claims and FDT’s categorical denial leaves the stablecoin and broader custody sector in uncertain territory as the case develops.

This situation underscores the critical importance of transparent custody arrangements and regulatory oversight in the stablecoin ecosystem, issues that remain top-of-mind for institutional participants evaluating collateral security.