Is FDUSD Facing a Coordinated Attack?

Recent events have thrust First Digital USD (FDUSD), a stablecoin issued by Hong Kong-based First Digital Trust, into the spotlight. Allegations of insolvency, depegging incidents, and market reactions have raised questions about the stability of FDUSD and its impact on the broader cryptocurrency market.

Justin Sun's Allegations

On April 2, 2025, Justin Sun, founder of TRON, publicly claimed that First Digital Trust was insolvent and unable to fulfill client fund redemptions. He urged users to secure their assets and called for regulatory intervention to protect Hong Kong's financial reputation.

FDUSD's Depegging Incident

Following Sun's statements, FDUSD's value dropped to $0.8726, deviating significantly from its $1 peg. This decline was particularly concerning given FDUSD's prominence on Binance, where it had been heavily promoted and used in various programs.

Binance's Involvement

Binance, the world's largest cryptocurrency exchange by volume, had integrated FDUSD into its platform, offering zero-fee trading pairs and incorporating it into its Launchpad and Launchpool programs. As of their latest proof of reserves, Binance held approximately 1.675 billion FDUSD.

Market Reactions

In response to the depegging, trading firm Wintermute reportedly purchased $31.36 million worth of FDUSD from Binance, possibly aiming to capitalize on arbitrage opportunities. Subsequently, FDUSD's value partially recovered to $0.96.

First Digital Trust's Response

First Digital Trust refuted Sun's insolvency claims, asserting that FDUSD is fully backed 1:1 by U.S. Treasury Bills and that all reserves are secure and accounted for. They labeled Sun's allegations as false and indicative of a coordinated smear campaign.

Implications for the Crypto Market

If the insolvency allegations against First Digital Trust were substantiated, it could have profound repercussions for the cryptocurrency market, potentially affecting investor confidence and market stability.

Conclusion

The controversy surrounding $FDUSD underscores the importance of transparency and due diligence in the cryptocurrency space. Investors are advised to stay informed and exercise caution when engaging with digital assets.