FDUSD Stablecoin Faces Pressure Amid Allegations
FDUSD, the stablecoin launched by Hong Kong-based First Digital, has recently experienced a significant dip from its intended $1 price peg. Investors are expressing growing concerns regarding the stability of its reserves, prompting the company to assert its financial health. On Wednesday, First Digital declared that it remains “completely solvent.”
Market Reactions: FDUSD’s Price Plunges
As of now, FDUSD is trading at approximately 0.87 against Tether’s USDT and 0.76 against Circle’s USDC on Binance, the primary exchange for FDUSD. In an unexpected turn, Bitcoin (BTC) almost reached a value of 100,000 against FDUSD. Although the token has stabilized slightly to around $0.98-$0.96, it continues to trade below its expected price anchor.
Allegations Arise from TrueUSD Reserve Issues
The recent turbulence in FDUSD’s price can be linked to a report from CoinDesk, which indicated that some reserve assets of the TrueUSD stablecoin were tied up in illiquid investments. This situation prompted Tron founder Justin Sun to intervene and provide a bailout for the issuing company. As a result, First Digital Trust, a company associated with First Digital, was appointed to manage the reserves for TrueUSD.
Justin Sun’s Claims and First Digital’s Response
In a post on social media platform X, Justin Sun claimed, “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.”
First Digital quickly countered these allegations, asserting in their own X post that “First Digital is completely solvent” and that “every dollar backing FDUSD is completely secure, safe, and accounted for with U.S. backed T-Bills.” The company further accused Sun of engaging in a “typical smear campaign” aimed at undermining a competitor in the market.
Legal Action on the Horizon
In light of these events, First Digital Trust has announced its intention to pursue legal action to protect its rights and reputation against the claims made by Sun. They emphasized that they had not yet been given the opportunity to address the TUSD situation in a legal setting and criticized the coordinated social media strategy employed by Sun.
FDUSD’s Reserve Stability Report
According to the latest monthly reserve report from FDUSD, the total reserve assets amount to $2 billion, primarily held in U.S. Treasury bills, with a smaller portion allocated to repo facilities and fixed deposits. This breakdown aims to reassure investors about the financial backing of the stablecoin amidst the ongoing controversy.
Conclusion
The situation surrounding FDUSD and First Digital is evolving, with potential legal battles on the horizon. Investors are urged to stay informed and vigilant as developments unfold in this complex landscape of cryptocurrency and stablecoins.
