In a surprising turn of events, Justin Sun, a prominent figure within the Tron (TRX) ecosystem, has revealed that First Digital Trust (FDT), a tech-driven financial institution based in Hong Kong, is effectively insolvent and unable to cover its obligations. In an X post on April 2nd during the late Western financial markets, Sun noted that FDT has a significant loophole in the internal risk management of its financial systems and the trust licensing process in Hong Kong.
“I urge regulators and law enforcement to take swift action to address these issues and prevent further major losses. Hong Kong’s reputation as a global financial center is at stake, and similar financial fraud incidents must never happen again,” Sun noted.
Meanwhile, Sun will issue a press conference regarding the unfolding crisis on April 3.
Market Impact
Following the announcement, FDUSD, fiat-backed stablecoins that are directly supported by Binance exchange dropped over 2 percent to trade about 97 cents at the time of this writing. The mid-cap stablecoin, with a fully diluted valuation of about $2.54 billion and a daily average trading volume of around $6.9 billion, depegged for the first time to as low as 91 cents, before Yi He clarified the air.
According to He, co-founder of Binance, Sun is suing TrueUSD (TUSDsuing TrueUSD (TUSD), which has an FDV of about $495 million and a 24-hour trading volume of about $56 million. However, He noted that Binance is following up on the matter to ensure the safety of the customers.
“No one knew that Brother Sun would tweet in the middle of the night, but Binance launched the stablecoin of launchpool. We will check the funds regularly and we have our own risk control. Binance post-listing is also looking for fdusd, trying to understand the situation, and calling people in the middle of the night. We are just making logical judgments,” He noted.
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