First Digital to 'Pursue Legal Action' Over Justin Sun Allegations as FDUSD Drops
FDUSD has dropped to 0.87 against Tether's USDT stablecoin and 0.76 against Circle's USDC on Binance, the main exchange where FDUSD is listed. Notably, bitcoin (BTC) also nearly hit 100,000 against FDUSD. The token has stabilized around $0.98-$0.96 later, still trading below its supposed price anchor.
The sudden price action happened as CoinDesk earlier Wednesday reported that some of the TrueUSD stablecoin's reserve assets were stuck in illiquid investments, according to filings. Tron founder Justin Sun bailed out the issuer company. First Digital Trust, a trust company affiliated to First Digital, was appointed to manage TUSD reserves.
"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," Tron founder Justin Sun claimed in a Wednesday X post. First Digital refuted the allegations in an X post, saying that "First Digital is completely solvent" and "every dollar backing FDUSD is completely, secure, safe and accounted for with US backed T-Bills."
"This is a typical Justin Sun smear campaign to try to attack a competitor to his business. 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," the company said. "FDT will pursue legal action to protect its rights and reputation." FDUSD's latest monthly reserve report showed that the $2 billion of reserve assets were held mostly in U.S. Treasury bills and a lesser part in repo facilities and fixed deposits. Stablecoin analytics firm Bluechip told CoinDesk it gave FDUSD a C grade (on a scale from F as least safe to to A+ being safest) and expressed concerns over reserve assets being bankruptcy remote from the issuer company. "FDUSD appears to be backed by reasonably sound reserves. But we concluded that in case of bankruptcy, the reserves could be used to pay off the parent company's debt," Garett Jones, Bluechip's chief economist, said in a message. "It's hard to predict what would really happen in a crisis, but safer stablecoins do exist."
UPDATE (Apr. 2, 17:58): Added analyst comment from Bluechip. Updated FDUSD price action.
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