Market Cap: $2.6133T -4.120%
Volume(24h): $136.1508B 77.830%
  • Market Cap: $2.6133T -4.120%
  • Volume(24h): $136.1508B 77.830%
  • Fear & Greed Index:
  • Market Cap: $2.6133T -4.120%
Cryptos
Topics
Cryptospedia
News
CryptosTopics
Videos
Top News
Cryptos
Topics
Cryptospedia
News
CryptosTopics
Videos
bitcoin
bitcoin

$83571.608249 USD

-1.38%

ethereum
ethereum

$1826.028236 USD

-3.02%

tether
tether

$0.999839 USD

-0.01%

xrp
xrp

$2.053149 USD

-2.48%

bnb
bnb

$601.140115 USD

-0.44%

solana
solana

$120.357332 USD

-3.79%

usd-coin
usd-coin

$0.999833 USD

-0.02%

dogecoin
dogecoin

$0.166175 USD

-3.43%

cardano
cardano

$0.652521 USD

-3.00%

tron
tron

$0.236809 USD

-0.59%

toncoin
toncoin

$3.785339 USD

-5.02%

chainlink
chainlink

$13.253231 USD

-3.91%

unus-sed-leo
unus-sed-leo

$9.397427 USD

-0.19%

stellar
stellar

$0.266444 USD

-1.00%

sui
sui

$2.409007 USD

1.15%

Cryptocurrency News Articles

FDT denies Justin Sun insolvency allegations and says its stablecoin is fully backed with US Treasury bills

Apr 03, 2025 at 02:02 am

Sun had made the allegation earlier in the day in a social media post, where he said the firm was insolvent and unable to process the redemption of its stablecoin, FDUSD.

First Digital Trust (FDT) has denied claims by Tron founder Justin Sun that the firm is insolvent and unable to process the redemption of its stablecoin.

Earlier today, Sun made the allegations in a social media post, where he said the firm was insolvent and unable to process the redemption of its stablecoin, FDUSD.

The news caused FDUSD to break its peg and fall as low as $0.8726. It has since partially recovered to $0.9870.

The incident has also raised questions about the stablecoin’s solvency, the transparency of its issuer, and potential systemic implications for Binance, which holds a significant amount of the asset.

Insolvency allegations

First Digital emphasized that the dispute involves TrueUSD (TUSD), not FDUSD, and asserted that all FDUSD reserves are fully backed and verifiable through US Treasury Bills.

The company added that the specific ISIN numbers for the reserves are documented in its attestation report. However, the TUSD issuer claims that FDT allegedly misplaced roughly $500 million in TUSD into bad investments.

First Digital Trust added:

“Every dollar backing $FDUSD is completely, secure, safe and accounted for with US backed T-Bills. The exact ISIN numbers of all of the reserves of FDUSD are set out in our attestation report and clearly accounted for.”

The firm labeled Sun’s statements as a “typical Justin Sun smear campaign to try to attack a competitor to his business.” It said that rather than allowing the legal dispute over TUSD to proceed in court, Sun had launched a “coordinated social media effort to try to damage FDUSD as a business competitor.”

First Digital Trust said it would pursue legal action to protect its rights and reputation. The company also plans to hold an “Ask Me Anything” (AMA) event on X on April 3, right after Justin Sun’s own AMA.

Tron founder Justin Sun’s public statement urging users to withdraw assets tied to First Digital Trust was the primary catalyst for the depeg.

He said:

“There are significant loopholes in both the trust licensing process in Hong Kong and the internal risk management of its financial system. I urge regulators and law enforcement to take swift action to address these issues and prevent further major losses.”

Sun added that Hong Kong’s reputation as a global financial center was at stake in this case.

Binance exposure under scrutiny

According to Coinbase head of product business operations Conor Grogan, Binance holds about 94% of the FDUSD supply. This amounts to around $2.2 billion, with $1.5 billion originating from user deposits and $700 million from corporate funds.

He added that the FDUSD/BTC pair is historically the most traded on the platform, making the depeg event a significant operational concern.

AP Collective founder Abhishek Pawa noted that FDUSD’s role within Binance’s infrastructure expanded rapidly after the platform began distancing itself from the Binance USD (BUSD) in early 2023.

That move came in response to US regulatory pressure when the Securities and Exchange Commission (SEC) and NYDFS labeled BUSD, issued by Paxos, a potential unregistered security.

Binance gradually phased out BUSD incentives, trading pairs, and promotional campaigns, shifting liquidity toward alternatives such as FDUSD, USDT, and TUSD.

The FDUSD crisis marks a stark contrast to the controlled wind-down of BUSD. Unlike BUSD, which was issued by a US-regulated entity, FDUSD was positioned as a more compliant alternative aligned with Hong Kong’s regulatory framework.

Binance integrated FDUSD deeply into its ecosystem, making its sudden instability more damaging in both reputational and operational terms.

According to Abhi, while Binance’s FDUSD reserves reportedly maintain a 111% collateralization, the event has nonetheless cast doubt on the asset’s liquidity and redemption mechanisms.

He added that the FDUSD’s instability also reopens regulatory questions for Binance. After the BUSD debacle, the platform emphasized its renewed commitment to compliance and transparency.

However, the current episode may prompt renewed scrutiny of its due diligence and risk assessment practices, particularly regarding third-party stablecoin issuers.

Disclaimer:info@kdj.com

The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!

If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.

Other articles published on Apr 03, 2025