On Wednesday morning, a well-known stablecoin decoupled from the US dollar amid allegations that its Hong Kong-based issuer was facing bankruptcy.
In a recent thread on X, the social media platform, Justin Sun, the crypto billionaire and Tron (TRX) founder, issued a call to action for his followers to safeguard their assets held in FDUSD, a stablecoin managed by First Digital Trust (FDT).
Sun also urged regulators to intervene and prevent further losses, emphasizing the importance of protecting Hong Kong’s financial reputation.
“First Digital Trust (FDT) is currently insolvent and incapable of meeting client fund redemption requests. It is crucial for users to secure their assets immediately.
There are significant gaps in both the trust licensing process in Hong Kong and the internal risk management of its financial system.
I implore regulators and law enforcement to act swiftly to address these issues and prevent future major losses. Hong Kong’s status as a global financial hub is at risk, and similar financial fraud incidents must be prevented.”
FDUSD experienced a drop to around $0.949 earlier in the day but has since bounced back and is currently trading at $0.982, reflecting a 1.27% decrease over the past 24 hours.
In response to Sun’s claims, FDUSD has refuted the allegations and plans to take legal action to protect its reputation.
“Justin Sun’s recent accusations against First Digital Trust are entirely unfounded.
This dispute pertains to TUSD and not FDUSD. First Digital Trust remains financially stable.
Every dollar supporting FDUSD is secure, safe, and backed by US Treasury Bills. The precise ISIN numbers of all FDUSD reserves are detailed in our attestation report and are fully accounted for.
This is a typical smear campaign by Justin Sun to undermine a competitor in his business. Despite not having the chance to defend ourselves, Justin has chosen to launch a coordinated social media campaign to tarnish FDUSD as a business rival.
FDT will pursue legal action to uphold its rights and reputation.”
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Featured Image: Shutterstock/Yurchanka Siarhei/Sensvector