First Digital Disputes Insolvency Claims as FDUSD Loses Peg Following Justin Sun Allegations
FDUSD, the stablecoin issued by Hong Kong-based First Digital, fell below its intended $1 peg this week amid accusations from Tron founder Justin Sun, who claimed the company managing its reserves is “effectively insolvent.” The stablecoin dropped as low as $0.87 against USDT and $0.76 against USDC on Binance before partially recovering to the $0.96–$0.98 range.
Sun’s comments followed a CoinDesk report detailing issues with reserve management for TrueUSD (TUSD), where First Digital Trust (FDT) had a custodial role. Sun alleged on X that FDT could no longer process redemptions and urged users to protect their assets.
First Digital strongly denied the allegations, calling the insolvency claim “false and misleading.” The company asserted that all FDUSD tokens are fully backed by U.S. Treasuries and other secure assets, and labeled Sun’s statements a “smear campaign” designed to harm a competing stablecoin. First Digital added that it intends to pursue legal action to defend its reputation.
In its most recent reserve disclosure, FDUSD reported $2 billion in assets, largely in T-bills. Still, concerns linger. Stablecoin ratings firm Bluechip gave FDUSD a “C” grade, citing the possibility that reserves could be used to satisfy parent company liabilities in the event of bankruptcy.
“FDUSD appears backed by quality assets, but the structure may expose holders to risk in a crisis,” said Garett Jones, Bluechip’s chief economist.
The dispute adds another layer of scrutiny to stablecoin operations, especially as the market continues to assess which issuers can be trusted in high-stress situations.
