Quick take:
- The Hong Kong-based stablecoin issuer has since made a statement vowing to pursue legal action against Sun.
- The FDUSD later recovered to trade around $0.98 to USDT on Binance.
- First Digital Trust also managed reserves for TrueUSD (TUSD) when it fell below the $1 peg in January last year.
FDUSD, the stablecoin issued by First Digital, has recovered from an earlier plunge to trade at about $0.977 to the USDT, according to CoinMarketCap data. The coin earlier fell to $0.87 after Tron founder Justin Sun claimed First Digital Trust, which manages reserves for the FDUSD, was “effectively insolvent”.
“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 wrote on X.
The crypto company has since made a statement affirming its solvent status and vowing to pursue legal action against Sun.
“Every dollar backing $FDUSD is completely, secure, safe and accounted for with US backed T-Bills. The exact ISIN numbers of all of the reserves of FDUSD are set out in our attestation report and clearly accounted for,” First Digital wrote in an X post.
According to the Hong Kong-based stablecoin issuer, Sun’s comments were nothing but a “smear campaign to try to attack a competitor to his business.”
The statement follows an earlier report by CoinDesk, which claimed that “some of the TrueUSD stablecoin’s reserve assets were stuck in illiquid investments,” citing filings.
First Digital Trust (an affiliate of First Digital) managed reserves for TrueUSD (TUSD) when it fell below the $1 peg in January last year, before being bailed by Sun.
“As we told the reporter at CoinDesk, we have not yet had the opportunity to defend ourselves and instead of letting the TUSD matter be dealt with in court, Justin has instead resorted to a coordinated social media effort to try to damage FDUSD as a business competitor,” First Digital added on its statement on X.
According to the latest FDUSD monthly reserve report, more than $1.7 billion of its $2 billion reserves are held in US treasury bills, $33 million in repos and more than $145 million in fixed income deposits, while $139 million is held in US dollars.
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