Concerns Arise Over FDUSD Stablecoin’s Price Stability
FDUSD, the stablecoin launched by Hong Kong-based First Digital, has recently experienced significant fluctuations, straying from its intended $1 price peg. Investor apprehensions regarding its reserve backing have intensified, leading to a notable decline in its value. As of Wednesday, FDUSD dropped to 0.87 against Tether’s USDT and 0.76 against Circle’s USDC on Binance, the primary exchange where FDUSD is traded. Although the token managed to stabilize around $0.98 later, it continues to trade below its expected price anchor.
The dramatic price shifts coincided with a report by CoinDesk, which revealed that some of TrueUSD’s reserve assets were locked in illiquid investments, raising further concerns among investors. In an unexpected turn, Tron founder Justin Sun intervened to support the issuer company. First Digital Trust, an entity affiliated with First Digital, has been appointed to manage the reserves for TUSD. In a post on X, Sun claimed, “First Digital Trust (FDT) is effectively insolvent and unable to fulfill client fund redemptions. I strongly recommend that users take immediate action to secure their assets.”
In response to these allegations, First Digital issued a statement on X, asserting that “First Digital is completely solvent” and that “every dollar backing FDUSD is completely secure, safe, and accounted for with U.S. backed T-Bills.” The company characterized Sun’s comments as a “typical smear campaign” aimed at undermining a competitor. They added, “As we informed the reporter at CoinDesk, we have not yet had the opportunity to defend ourselves. Instead of allowing the TUSD situation to be resolved through legal channels, Justin has opted for a coordinated social media effort to damage FDUSD’s reputation as a business rival.” Furthermore, they indicated that “FDT will pursue legal action to protect its rights and reputation.”
In its latest monthly reserve report, FDUSD disclosed that its $2 billion in reserve assets is primarily held in U.S. Treasury bills, with a smaller portion allocated to repo facilities and fixed deposits. This transparency aims to reassure investors about the stability and backing of FDUSD amidst the ongoing scrutiny.
