First Digital Labs Confirms FDUSD Stability Amid Fraud Allegations
First Digital Labs has issued a new attestation that confirms its FDUSD stablecoin is fully collateralized, amidst serious fraud allegations made by Tron’s founder, Justin Sun. The report, dated April 14, reveals that the total supply of FDUSD, which stands at 2.58 billion tokens, is entirely backed by assets that include over $1.74 billion in U.S. Treasury bills along with $603 million in overnight repurchase agreements. Additional holdings comprise fixed deposits situated in various jurisdictions.
The firm reiterated that all reserves for FDUSD are secured in accounts that are insulated from bankruptcy risks and that company funds are never intermingled with these reserves. With over $1 billion in FDUSD redeemed by users without any issues, the company emphasizes its adherence to principles of financial transparency, accountability, and the protection of client assets. In line with this mission, First Digital has also appointed two reputable firms to oversee its operations.
Allegations of Misappropriation by Justin Sun
These affirmations come on the heels of grave accusations from Justin Sun, who alleged that First Digital Trust had misappropriated nearly $500 million from client accounts. In his claims, he accused the company and its associates, including the Dubai-based Aria DMCC, of tricking the issuer of FDUSD into transferring funds to misrepresented entities. Sun further alleged that the funds were redirected using a fraudulent address switch, partially landing in a Hong Kong account referred to as “Glass Door.” He labelled this situation a “major international financial fraud”, likening it to conventional crypto wallet hacks. During a live stream and subsequent meetings with regulatory authorities in Hong Kong, Sun presented purported evidence supporting his claims.
First Digital Trust’s Legal Action
In response to these allegations, First Digital Trust has rejected all accusations and initiated a defamation lawsuit against Sun in Hong Kong’s High Court. The legal action aims to prevent Sun from making further statements regarding the claims and seeks retractions and monetary damages. Earlier in the month, the controversy surrounding these disputes caused FDUSD to momentarily lose its dollar peg, dropping to as low as $0.87; however, at the time of this report, the stablecoin has made a slight recovery and is trading at $0.99.
The Future of FDUSD
FDUSD, which is issued by FD121 Limited and regulated by First Digital Trust, has emerged as a prominent choice among fiat-backed stablecoins. It is currently accessible across various blockchain platforms, including Ethereum, BNB Chain, Solana, and Sui. As this legal matter develops, First Digital Trust has committed to maintaining its practice of regular attestations and collaborating with independent firms to ensure the reliability of its asset backing.
