Following a reserve crisis that hit TrueUSD and Justin Sun’s intervention, First Digital Trust denied claims of insolvency.

The Trust, at the center of the fiasco, says it is fully solvent while accusing Sun of sensationalism.

First Digital Trust, the Hong Kong-based trust at the center of a recent reserve crisis concerning TrueUSD (TUSD) and Justin Sun's surprising intervention, has vehemently denied claims of insolvency.

In a new statement, the Trust asserts that it is fully solvent and capable of meeting its financial obligations. However, the trust's statement also pivots to accuse Sun of fabrications and sensationalism.

First Digital Trust Denies Insolvency Claims

First Digital Trust has released a statement refuting allegations of financial impropriety and insolvency. According to the statement, First Digital Trust says it is completely solvent while accusing Justin Sun of falsehood.

The Trust has been at the center of a whirlpool of a liquidity crisis involving TrueUSD (TUSD) with Justin Sun stepping in to stabilize the stablecoin with a capital injection. The Tron founder launched a tirade against the Hong Kong-based trust, accusing it of financial mismanagement including unauthorized trade finance loans.

“The recent allegations by Justin Sun against First Digital Trust are completely false,” read the statement.

The Trust disclosed that its FDUSD stablecoin is solvent and backed by US Treasury Bills. Per the statement, the legal dispute surrounding TUSD has nothing to do with FDUSD, accusing Sun of a smear campaign. First Digital Trust says it has not had the opportunity to defend itself in court, accusing Sun of launching social media attacks.

“This is a typical Justin Sun smear campaign to try to attack a competitor to his business,” added First Digital Trust.

The statement comes after a series of events unfolded, beginning with a report by TokenInsight, which alleged that First Digital Trust had misused funds allocated for TrueUSD. The report, which surfaced on July 17, claimed that the trust had diverted a substantial portion of the allocated funds to provide trade finance loans without proper authorization from TrueUSD.

The report further alleged that the trust's actions had led to a liquidity shortfall for TrueUSD, ultimately resulting in a de-pegging of the stablecoin from its target $1 value. As a result of the report, investors were advised to exercise caution and prioritize the safety of their assets.

The unfolding saga of TrueUSD and First Digital Trust unfolded as the United States moved to tighten regulations on stablecoins with the GENIUS Act and STABLE Act.