The market's trust in stablecoins has thus been put to the test.
Written by: Deep Tide TechFlow
The crypto market is rife with disputes, and conflicts involving key figures can directly impact asset prices.
On the evening of April 2, 2025, Justin Sun posted on X, claiming that First Digital Trust (FDT) "has effectively gone bankrupt and is unable to redeem customer funds."
He strongly advised users to protect their assets immediately and called for Hong Kong regulators to intervene to maintain the reputation of the financial center.
Following the post, the price of FDUSD quickly plummeted.
According to CoinMarketCap data, FDUSD fell to a low of $0.8811 within 24 hours (on April 2, 2025), with a total market cap shrinking by approximately $130 million, reflecting market concerns over FDUSD's insufficient reserves.
Binance, as the main trading platform for FDUSD, also responded swiftly.
Sisi pointed out in the community that FDUSD can be redeemed at a 1:1 ratio; meanwhile, He Yi also posted to clarify that Justin Sun's lawsuit involves TUSD, not FDUSD, attempting to distinguish the disputes between the two.
After a series of posts and replies, the price of FDUSD partially recovered, reaching $0.989 at the time of publication, still below the pegged price of $1.
FDUSD, TUSD, FDT… The similar letters can easily confuse people.
What exactly happened behind the decoupling of asset prices in this dispute?
FDUSD and FDT
Perhaps some players are unfamiliar with FDUSD and the company FDT.
FDUSD is a stablecoin pegged to the US dollar at a 1:1 ratio, issued in June 2023 by First Digital Labs (hereinafter referred to as FDT), which belongs to First Digital Limited based in Hong Kong. FDT, as a trust company, is responsible for managing the reserves of FDUSD to ensure its value stability, suitable for trading, remittances, and DeFi applications.
FDT also responded after Justin Sun's post, conveying that FDUSD remains safe: "First Digital is fully solvent. Every dollar backing $FDUSD is complete, safe, and reliable, and is accounted for by US Treasury securities. The exact ISIN numbers of all reserves of FDUSD are listed in our certification report and have clear records."
At the same time, FDT claimed that Justin Sun's recent accusations against First Digital Trust are completely erroneous, and this dispute is related to TUSD, not $FDUSD.
As both sides hold their ground, how did TUSD come into the picture?
FDT Misappropriating TUSD Reserves? Justin Sun's $456 Million Bailout
Behind this dispute may lie more complex grievances involving another stablecoin, TUSD (TrueUSD), and the role FDT plays in it.
Although TUSD and FDUSD have similar names, they are completely different stablecoins issued by different entities.
TUSD is currently issued by another company called Techteryx, and the relationship here is: FDT once served as the custodian of its reserves, responsible for managing TUSD's funds.
According to Coindesk reports, after acquiring TrueUSD from TrueCoin in December 2020, Techteryx appointed the Hong Kong-based trustee First Digital Trust (FDT) to manage its stablecoin reserves.
However, Justin Sun's accusations and subsequent disclosures indicate that FDT may have serious issues in managing TUSD reserves.
According to an exclusive report from Hong Kong's Sing Tao Daily, FDT's CEO Vincent Chok has been accused of involvement in fraud amounting to as much as $9.5 billion (approximately HKD 74 billion), with core allegations stemming from FDT's violations during the management of TUSD reserves.
From 2023 to early 2024, TUSD's reserves experienced a significant shortfall due to FDT's unauthorized transfer of $456 million (approximately HKD 3.5 billion) to a Dubai company, Aria Commodities DMCC, for high-risk resource development project investments.
These investments had extremely low liquidity, leading to TUSD's reserves being unable to be redeemed in a timely manner, resulting in a liquidity crisis.
Sing Tao Daily also pointed out that Vincent Chok was accused of receiving a secret commission of $15.5 million (approximately HKD 120 million) through an entity called "Glass Door."
This behavior was labeled as "fraudulent misrepresentation and misappropriation of funds," directly leading to a severe shortfall in TUSD's reserves.
Techteryx (the issuer of TUSD) subsequently filed a lawsuit in Hong Kong courts through the American law firm Cahill Gordon & Reindel, seeking compensation and attempting to recover losses.
Techteryx's documents indicate that due to TrueUSD's reserves being trapped in non-redeemable investments, its balance sheet experienced a shortfall of $456 million during the period from 2023 to early 2024.
During TUSD's liquidity crisis, Justin Sun played a key role.
According to Sing Tao Daily, Justin Sun provided emergency funding support for TUSD from 2023 to early 2024, helping to isolate 456 million TUSD, ensuring that retail users could continue to redeem, thus avoiding greater market panic.
Although this action temporarily stabilized TUSD, it also brought Justin Sun's conflicts with FDT to the surface.
Justin Sun's assistance was not without cost. According to CoinDesk, the funds he provided were injected in the form of a loan, and the $456 million funding shortfall is not a small amount.
In response to the accusations, FDT's CEO Vincent Chok quickly made a rebuttal.
He denied all allegations, stating that FDT acted solely as a trustee intermediary, strictly following Techteryx's instructions for fund operations, and was not responsible for independently evaluating investment decisions. Chok also pointed out that Aria's refusal to redeem funds early due to anti-money laundering (AML) and know your customer (KYC) issues might be one of the reasons for the liquidity crisis.
Summary of Parties and Asset Relationships
By now, based on public information, you should understand the ins and outs of this dispute and the relationships between the various assets and parties:
TUSD, as a stablecoin issued by Techteryx, once entrusted FDT to manage its reserves,
However, FDT has been accused of misappropriating $456 million in funds to high-risk investments, leading to TUSD's liquidity crisis.
Justin Sun temporarily stabilized TUSD by providing emergency funding support, but he also expressed dissatisfaction with FDT, publicly accusing FDT of "bankruptcy," triggering the decoupling of FDUSD and subsequent market panic.
From the asset relationship perspective, although FDUSD and TUSD were both managed or previously managed by FDT, they are completely different stablecoins. FDUSD is FDT's main product, claiming to be backed by US Treasury bonds, while TUSD is issued by Techteryx, with FDT only serving as its custodian.
The positions of the parties are also becoming clearer:
FDT insists on its innocence, accusing Justin Sun of "slandering," and plans to use legal means to protect its reputation; Justin Sun is vocally calling for regulatory intervention, attempting to bring FDT's issues to light; Techteryx is pursuing accountability through litigation, trying to recover losses.
Meanwhile, Binance, as the main trading platform for FDUSD, quickly clarified and reassured the market.
However, the truth behind this dispute remains to be fully revealed.
The issues pointed out by Justin Sun regarding FDT may need to be answered through subsequent legal proceedings and regulatory investigations. The market's trust in stablecoins has thus been tested, and investors may need to start re-evaluating the transparency of stablecoin reserves and operational compliance.
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