FDT Responds to Allegations by Justin Sun; Binance Audit Report Confirms FDUSD 1:1 Reserve Backing

On April 2, Tron founder Justin Sun accused First Digital Trust (FDT) of being effectively bankrupt and unable to fulfill customer fund redemptions. Sun urged users to "take immediate action to secure their assets" and called on regulatory authorities and law enforcement agencies to act swiftly to address the issue, preventing further major losses.

Following Sun's allegations, FDUSD, a stablecoin issued by Hong Kong-based First Digital Labs and pegged 1:1 to the US dollar, saw its price drop sharply. According to CoinMarketCap data, FDUSD fell to a 24-hour low of $0.8811 on April 2, 2025, wiping out approximately $219 million in market capitalization. This decline reflects growing market concerns over FDUSD's reserve adequacy.

FDUSD is backed by US Treasury bonds and is widely used for cryptocurrency trading on platforms like Binance. FDT, as a trust company, manages FDUSD's reserves to ensure its value stability. However, Sun's accusations have cast doubt on FDT's ability to maintain this stability.

Sun's allegations referenced a previous report by Coindesk regarding a $456 million financial gap in the reserves of another stablecoin, TrueUSD (TUSD). TUSD is issued by Techteryx, while FDT had previously served as its reserve custodian, managing TUSD's funds. Sun alleged, without providing evidence, that FDT had engaged in unauthorized activities during its management of TUSD reserves, transferring $456 million to Dubai-based Aria Commodities DMCC for high-risk, low-liquidity resource development projects. These actions allegedly led to a liquidity crisis for TUSD, rendering its reserves unable to meet redemption demands. Sun had provided emergency funding for TUSD between 2023 and early 2024 to stabilize its operations, which subsequently led to disputes with FDT.

In response to Sun's accusations, First Digital issued a statement on X, dismissing the claims as entirely false. FDT emphasized that the dispute pertains to TUSD and not FDUSD. They assured the public that they are fully solvent and that every dollar backing FDUSD is secure, reliable, and supported by documented US Treasury bonds. FDT accused Sun of engaging in a defamatory campaign aimed at undermining his business competitors.

Binance responded to the controversy by releasing a third-party audit report from February 2025, which confirmed FDUSD's full 1:1 reserve backing.The audit demonstrated that FDUSD holders could redeem their tokens for dollars at a 1:1 ratio, reinforcing FDT's claims of solvency.

Despite these reassurances, Justin Sun continued to press his allegations, reiterating on X that FDT is unable to fulfill customer fund redemption obligations and is effectively insolvent. "Despite significant misconduct, this institution continues to operate in Hong Kong under the guise of public trust. This case highlights apparent loopholes in Hong Kong's trust industry, which can be exploited to circumvent financial and banking regulations," Sun stated.

Further escalating the dispute, Justin Sun later shared on X a screenshot of a report from Hong Kong's Sing Tao Daily, which alleged that "FDT CEO Vincent Chok(the left one in the graph) was charged with conspiracy to commit fraud involving multiple companies."

Although FDUSD’s price has rebounded to $0.993, the ongoing dispute between Justin Sun and FDT continues to raise questions about the transparency, governance, and reserve management practices of stablecoin issuers. The community is closely monitoring the developments of this controversy. Stay tuned with us for the latest updates on this matter.