FDUSD Depegged After Justin Sun–First Digital Trust Dispute

Last night (HK Time), Justin Sun, co-founder of TRON Blockchain, accused First Digital Trust of insolvency, triggering a severe depeg of the FTUSD stablecoin. The move is believed to be retaliation for past tensions between First Digital and Techteryx—a company rumored to be owned by Sun.

Justin Sun’s Accusation & FDUSD Depeg

On April 2, 2025, Justin Sun took to X to issue a stark warning about First Digital Trust, stating, “First Digital Trust (FDT) is effectively insolvent and unable to fulfill client fund redemptions. I strongly recommend that users take immediate action to secure their assets.” 

Sun also criticized Hong Kong’s financial system, urging regulators to intervene to prevent further losses. The post, which gained significant traction, triggered an immediate market reaction. FDUSD, a stablecoin designed to maintain a 1:1 peg with the US dollar, plummeted to as low as $0.87—a 13% depeg—within hours of Sun’s statement.

The depeg had a profound impact on Binance, the world’s largest crypto exchange. On-chain data estimates that 94% of FDUSD’s supply—approximately $2.2 billion—is traded on Binance, with $1.5 billion belonging to users and $700 million held by the exchange itself. If Sun’s allegations of FDT’s insolvency were true, Binance could face significant liquidity issues, potentially disrupting its operations and shaking confidence in the platform. The incident also caused a $130 million drop in FDUSD’s market cap, underscoring the scale of the crisis.

Response from First Digital Trust and Binance

First Digital Trust swiftly refuted Sun’s claims, labeling them as “false” and part of a “defamatory campaign.” The company clarified that the dispute involved TrueUSD (TUSD), not FDUSD, and emphasized that FDUSD remains fully solvent, backed 1:1 by US Treasury Bills. FDT announced plans for an AMA on X Spaces on April 3 to address the issue publicly and threatened legal action against Sun to protect its reputation. 

Binance also issued a statement, reaffirming that FDUSD’s reserves are fully backed and transparent, with attestations showing sufficient liquidity to cover redemptions. The exchange committed to ongoing monitoring of FDUSD’s stability, with a review planned after the next attestation report in two weeks.

Following these assurances, FDUSD began to recover, climbing back to a ratio of 1:0.99 against USDT by the morning of April 3. While the partial recovery alleviated some concerns, lingering doubts about FDUSD’s long-term stability remain, particularly given its heavy reliance on Binance’s ecosystem.

Underlying Cause of the Incident

The root of this incident lies in past tensions between First Digital Trust and Techteryx, the issuer of TrueUSD (TUSD), reportedly linked to Justin Sun. Court filings recently revealed that Techteryx sued First Digital Trust’s CEO, Vincent Chok, after FDT allegedly redirected $456 million of TUSD reserves into illiquid investments without authorization. 

A Dubai-based entity, Aria Commodities DMCC, diverted these funds—originally intended for the Cayman Islands-based Aria Commodity Finance Fund—and invested them in high-risk projects like mining and renewable energy. Techteryx faced a $456 million shortfall from 2023 to early 2024, prompting Sun to inject emergency liquidity to stabilize TUSD. 

TUSD was once a stablecoin on Binance, a replacement for BUSD, which ceased operation in 2023. Subsequently, TUSD’s market cap surged from under $1 billion to a peak of $3.8 billion in October 2023, with 90% of its total supply on Binance. However, then this exchange gradually phased it out in favor of FDUSD.

FDUSD is a stablecoin with a relatively high trading market cap on Binance, ranking just behind trading pairs involving USDT. Notably, investors on Binance can also stake FDUSD to participate in recent Binance Launchpool programs such as Gunz (GUN), Nillion (NIL), Redstone (RED), Bio Protocol (BIO), and more.