FDUSD Depegs as Justin Sun Accuses FDT of Financial Mismanagement

In a surprising turn of events, Justin Sun, a prominent figure within the Tron (TRX) ecosystem, has revealed that First Digital Trust (FDT), a tech-driven financial institution based in Hong Kong, is effectively insolvent and unable to cover its obligations. In an X post on April 2nd during the late Western financial markets, Sun noted that FDT has a significant loophole in the internal risk management of its financial systems and the trust licensing process in Hong Kong.

“I urge regulators and law enforcement to take swift action to address these issues and prevent further major losses. Hong Kong’s reputation as a global financial center is at stake, and similar financial fraud incidents must never happen again,” Sun noted. 

Meanwhile, Sun will issue a press conference regarding the unfolding crisis on April 3. 

Market Impact

Following the announcement, FDUSD, fiat-backed stablecoins that are directly supported by the Binance exchange dropped over 2 percent to trade about 97 cents at the time of this writing. The mid-cap stablecoin, with a fully diluted valuation of about $2.54 billion and a daily average trading volume of around $6.9 billion, depegged for the first time to as low as 91 cents, before Yi He clarified the air.

According to He, co-founder of Binance, Sun is suing TrueUSD (TUSD), which has an FDV of about $495 million and a 24-hour trading volume of about $56 million. However, He noted that Binance is following up on the matter to ensure the safety of the customers.

First Digital Trust Response to Justin Sun Allegation

First Digital Labs has reassured the community that FDUSD remains fully redeemable on a 1:1 basis with US dollars, emphasizing the stablecoin’s continued peg and reliability.

In response to recent FUD (Fear, Uncertainty, and Doubt), the company stated it does not take such misinformation lightly. First Digital Labs confirmed it will pursue legal action against those spreading false claims in order to protect its users and uphold trust in the FDUSD ecosystem.