A stablecoin reportedly lost its peg to the US dollar on Wednesday morning after allegations surfaced about its issuer, a Hong Kong-based entity, facing bankruptcy.
Justin Sun, the founder of Tron (TRX), warned his X followers to immediately safeguard any assets held in FDUSD, a stablecoin managed by First Digital Trust (FDT). Sun emphasized the urgency of regulatory intervention to minimize losses and protect Hong Kong’s reputation as a leading financial hub.
According to Sun, FDT is financially insolvent and unable to fulfill redemption requests from clients. He pointed out flaws in Hong Kong’s trust licensing process and the internal risk management practices within its financial system, calling for immediate action to prevent further incidents that could harm the city’s financial standing.
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Despite the concerns raised, FDUSD managed to bounce back after initially dropping to $0.949, recovering to $0.982, though still reflecting a slight decrease of 1.27% within the past 24 hours.
However, First Digital Trust strongly rejected Sun’s allegations, labeling them as baseless and defamatory. The company clarified that the dispute involves TUSD, not FDUSD, and insisted that all FDUSD reserves are fully backed by US Treasury Bills, with the details transparently documented in their attestation report.
The firm accused Sun of launching a smear campaign to damage FDUSD’s reputation as a rival business, claiming that his social media statements were an attempt to gain a competitive edge rather than address legitimate issues. First Digital Trust intends to take legal action to protect its image against what it calls a coordinated attack.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
Source: https://coindoo.com/stablecoin-depegs-amid-insolvency-allegations-justin-sun-sparks-controversy/