On April 2 at 11 PM, TRON founder Sun Yuchen accused the stablecoin FDUSD issuing party First Digital Trust (FDT) of insolvency and inability to fulfill customer fund redemptions. As a result, FDUSD seriously depegged, with the lowest values on Binance reaching 0.87 for FDUSD/USDT and 0.76 for FDUSD/USDC.
As one of the most important stablecoins on the Binance platform, FDUSD also serves as a ticket for user participation in Binance Launchpool activities, with many holding a certain amount. As panic spread, some users chose to sell at a discount. However, ultimately, with Binance founder He Yi's statement refuting the rumors, the price of FDUSD strongly rebounded from the bottom, stabilizing at 0.987 USDT.
On April 3 at 5 AM, Binance officially stated that based on a recently completed audit, the stablecoin FDUSD has achieved a 1:1 reserve backing. However, users did not buy this, redirecting their anger over losses towards Binance, questioning the delay in their announcement and that important news was first communicated in the 'large holder community', leading to widespread discontent.
Odaily Planet Daily summarized the events as follows.
Sun Yuchen late at night accused the FDUSD issuing party First Digital Trust (FDT) of being insolvent.
Sun Yuchen stated: 'The stablecoin FDUSD issuing party First Digital Trust (FDT) is actually insolvent and unable to fulfill customer fund redemption obligations. I strongly advise users to take immediate action to protect their assets and urge regulatory and law enforcement agencies to swiftly address these issues to prevent further significant losses.'
In the days leading up to this, Sun Yuchen had been releasing messages indicating that a 'major industry event' would be announced on April 3. The preheating version seen on social media was an invitation from Sun Yuchen, roughly stating: 'Sun Yuchen will hold a press conference in Hong Kong to expose an international financial fraud Ponzi scheme involving traditional financial institutions in Hong Kong and Web3 platforms.'
At this point, Sun Yuchen's situation somewhat echoes the recent major industry events, serving as an 'appetizer before the major industry event.'
Due to his post, FDUSD briefly dropped below $0.9, reaching a low of $0.8726. On Binance, FDUSD/USDT fell to as low as 0.87, and FDUSD/USDC once dropped to 0.76.
Binance's clarification: The lawsuit is against TUSD; what does it have to do with FDUSD?
While everyone was FUDing FDUSD, a small episode occurred: Wintermute took the opposite path, with on-chain analyst Ai monitoring that within 20 minutes after Sun Yuchen's post, a total of 31.36 million FDUSD was withdrawn from Binance in 4 transactions, making it the largest holder of FDUSD outside of Binance, holding approximately 65.46 million tokens, accounting for about 2.5% of the total circulation.
Of course, Wintermute was just arbitraging with FDUSD, and their actions did not trigger a rebound in FDUSD; users were still looking forward to Binance's statement. Binance's Sisi was the first to mention in a group that FDUSD could be redeemed at a 1:1 ratio, suggesting that Sun Yuchen's post might be related to some previous 'beef' between FDT and Sun Yuchen's projects.
Subsequently, Binance co-founder He Yi also posted on X stating: 'This incident is due to Sun Yuchen and TUSD being in a lawsuit, not FDUSD.'
But the problem is, many retail investors sold FDUSD in a panic, and under the words of Binance officials, it slowly began to re-peg. Users criticized Binance for responding in groups instead of issuing an official announcement. In response, He Yi stated that the Binance team is also in contact with FDUSD, and the announcement should come from them, not Binance. Binance has already conducted thorough audits, but this incident is a legal dispute between Sun Yuchen and FDT, and Binance is not fully aware.
Originating from the TUSD dispute: FDT's 'misconduct' and Sun's rescue.
Coindesk also confirmed in a timely manner the previous disputes between Sun Yuchen and FDT, which is not only the issuing institution of FDUSD but also the asset management institution for TUSD.
The story goes back to 2020. In December 2020, after taking over management of TrueUSD from TrueCoin, the trustee organization First Digital Trust (FDT) based in Hong Kong was appointed to manage its stablecoin reserves. In subsequent court filings, it was discovered that FDT engaged in some misconduct.
1. FDT invested the stablecoin reserves in the Aria Commodity Finance Fund (Aria CFF) registered in the Cayman Islands, but approximately $456 million was improperly diverted to an unauthorized independent entity, Aria DMCC, located in Dubai (the actual controllers of both are married). The plaintiff alleges that the funds sent to Aria DMCC constitute blatant misappropriation and money laundering, and these transactions were unauthorized.
2. First Digital CEO Vincent Chok is accused of transferring about $15.5 million in undisclosed commissions to an entity called 'Glass Door' and additionally issuing approximately $15 million in unauthorized trade financing loans from FDT to Aria DMCC, which were later incorrectly classified as legitimate fund investments.
Thereafter, FDT CEO Chok denied that any misconduct occurred during the process or that he was involved in any fraudulent schemes. He stated that FDT acted solely as a trustee intermediary, strictly executing transactions according to the instructions provided by Techteryx and its representatives, and the company is not responsible for independently assessing or advising on these investment decisions.
The dispute between Sun Yuchen and FDT also comes up here; it was precisely because of FDT's 'investments and misuse' that Techteryx almost failed to recover funds when attempting to redeem its investments from Aria CFF from mid-2022 to early 2023, with related entities facing accusations. During this period, Sun Yuchen stepped in to provide emergency liquidity support for TUSD, which was set up as a loan.
Sun Yuchen's primary connection with TUSD is that people often see him minting TUSD, which he then destroys to convert into stUSDT and deposits into JustLend, where JustLend was previously the largest use case for TUSD, allowing TUSD to be staked for other assets. Additionally, the current circulating supply of TUSD exceeds 495 million tokens, with approximately 167 million on the TRON network, ranking second.
Currently, $456 million in funds remain unreturned, and Sun Yuchen's loan is also in an unpaid status.
FDT's late-night Space and the FDUSD audit report.
Returning to FDUSD, as He Yi mentioned earlier, clarifications related to FDUSD should be made by FDT. One of FDT's accounts, First Digital, also conducted a 'statement regarding Sun Yuchen's false accusations' on X. FDT CEO Vincent Chok answered users' questions in real-time, and after summarizing, Odaily noted that Vincent Chok's responses could be divided into several points:
1. Sun Yuchen's accusations stem from an ongoing legal case involving TUSD that has been going on for over two years (as mentioned earlier in CoinDesk's content). I am not sure why this matter is being raised now. Furthermore, Hong Kong companies are all following legal compliance.
2. We will not go bankrupt; we have asset proof from third parties available on our website that anyone can check at any time, and the reserves are fully sufficient to support 1:1 FDUSD redemptions at any time.
3. Our funds and customer funds are completely separate; customers have their own reserves in the FDD accounts we manage. If we are insolvent, customer fund reserves will not be affected.
4. We are a fully regulated entity, we have passed all compliance checks including AML and KYC, and we have partnerships with banks that are very satisfied with us. I cannot control the FUD outside. But in reality, the way to sustain in this industry is to ensure complete transparency for our customers and users.
After the Space ended, Odaily checked their official website for reserve proof. FDT's reserve proof published in March indicated that as of February 28, 2025, at 9:00 PM ET (March 1, 2025, 9:00 AM HKT),
Total circulation of FDUSD: 2,041,924,819.94 tokens, total corresponding reserve assets for FDUSD: $2,051,348,188.70, with reserve asset composition including:
1. Total holdings of U.S. Treasury Bills: $1,733,452,142.60 (approximately 84.5%)
2. Overnight reverse repo agreements holdings: $33,000,000.00 (approximately 1.6%)
3. Fixed deposits holding: $145,880,000.00 (approximately 7.1%)
4. Cash deposits (Cash in U.S. Dollars) account cash balance: $139,016,046.10 (approximately 6.8%)
In other words, if the reserve proof is completely accurate, FDUSD is supported for 1:1 redemptions.
Is the stablecoin being cut again? The grievances between Sun Yuchen and FDT, with retail investors paying the price.
Finally, Sun Yuchen reiterated in a post that FDT has already declared bankruptcy and stated that everything will be decided by the judiciary and regulatory agencies.
As of the time of this post, Sun Yuchen's statement has not introduced any new significant evidence, and the court case regarding 'Techteryx suing FDT' is still ongoing. This wave of FUD against FDUSD seems to have settled, as FDUSD has not restored its peg but is gradually returning to above $0.98. 'Once bitten, twice shy'—due to the previous UST incident, many users are very cautious about stablecoin depegging, with most fleeing at the first sign of FUD, and some even selling at the lowest point before the rebound.
It seems that today is April Fool's Day: FDUSD has returned to around $0.98, Sun Yuchen is still emphasizing FDT's bankruptcy, the lawsuit against FDT is still ongoing, and Binance continues to support FDUSD, while your money has decreased by 10%.
As mentioned earlier, many users in the community questioned why Binance only came out to clarify the FDUSD issue on social media after it dropped below $0.9, suggesting they wanted retail investors to sell at the bottom while large traders bought in.
In response, Binance co-founder He Yi stated that the official announcement regarding FDUSD needs to follow procedures, requiring verification and time. Binance's Sisi only spoke out in a group after seeing some people panic-selling and felt compelled to mention that FDUSD could be redeemed at a 1:1 ratio.
As of April 3 at 1:30 PM, there is less than 10 hours until Sun Yuchen's Hong Kong press conference, and we will continue to track reporting related developments.
Original | Odaily Planet Daily (@OdailyChina)
Author | CryptoLeo (@LeoAndCrypto)
