Stablecoin Depegs Amid Insolvency Allegations – Justin Sun Sparks Controversy
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.
Alex is Editor-in-Chief of Coindoo and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
