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| Justin Sun |
First Digital Trust Denies Allegations, Vows Legal Action
A recent controversy surrounding stablecoin FDUSD has unsettled the cryptocurrency market. Tron (TRX) founder Justin Sun's assertion that First Digital Trust (FDT), the issuer of FDUSD, is "effectively insolvent" led to a temporary depegging of the stablecoin from the US dollar. In response, First Digital Trust has refuted Sun's claims, threatening legal action and denying any insolvency.
Sun's allegations, made via a post on X (formerly Twitter), stated, "First Digital Trust is effectively insolvent. Users should immediately safeguard their assets." He also pointed out "critical loopholes in Hong Kong’s financial regulatory system," urging regulatory bodies to intervene. Consequently, FDUSD's value plummeted to $0.949 before partially recovering to $0.982, still marking a 1.27% drop over 24 hours.
First Digital Trust countered Sun's claims, labeling them as "completely false" and clarified that the dispute was solely with TUSD, another stablecoin, and not with FDUSD. The company affirmed FDUSD's solvency, assuring that its reserves are securely held in US Treasury bonds. They further accused Sun of "deliberate defamation against a competitor" and an attempt to undermine FDUSD's credibility. The firm has announced its intention to "protect its reputation through legal proceedings."
Market analysts indicate that Sun's remarks have induced investor anxiety, resulting in short-term volatility for FDUSD. However, with First Digital Trust having provided proof of its reserves, the situation's resolution may depend on the outcome of the impending legal battle.