Connect with us

Hi, what are you looking for?

Stablecoin
Stablecoin
#image_title

Cryptocurrency

Justin Sun’s Insolvency Allegations Shake FDUSD Stablecoin

FDUSD Stablecoin Wobbles After Justin Sun’s Insolvency Allegations. First Digital firmly rejected Justin Sun’s accusations, labeling them a smear campaign and assuring that FDUSD remains fully backed. Questions about stablecoin transparency have come up over the incident due to its impact on Binance.

First Digital Trust, the company that created the first digital currency, caused its value to be pegged against the US dollar at a certain point. His statements, which originated on social media, resulted in a roughly 5% drop in FDUSD, which then partially regained it.

Investors should withdraw their assets from First Digital Trust. He added that the flaws in Hong Kong’s trust licensing process and financial risk management have left users at risk. He also asked regulators to step in to avoid destabilizing the market.

First Digital Trust, for its part, dismissed Sun’s claims as unfounded and asserted that US Treasury bills fully support FDUSD. The firm called Sun’s allegations an effort to weaken rival firms and a smear campaign. First Digital stressed that their reserves remain verifiable in publicly available attestation reports, assuring users all funds are now safe.

Consequences from the controversy have hit Binance particularly hard, as it has $2.2 billion worth of FDUSD customer deposits. As FDUSD is one of Binance’s most traded pairs, its issues may affect Binance and the larger crypto market.

Techteryx, the payer of TUSD, was involved in a separate dispute earlier than this one. Court filings revealed that the issuer of the TrueUSD (TUSD) stablecoin faced a $456 million shortfall due to illiquid investments. Sun previously provided support for TrueUSD, but fears about the management of stablecoin reserves and issuer transparency have since emerged.

With regulators and investors watching the events closely, experts say the incident has rekindled the need for an on-demand, verifiable proof-of-reserves mechanism to ensure stablecoin solvency.

author avatar
Satpal S
Satpal is an Editor and Author at 4C Media Co, specializing in all stories and news related to crypto and finance.
Advertisement

You May Also Like

Cryptocurrency

Amid the financial pressure on many companies to examine Bitcoin, it is estimated that a quarter of the S&P companies will have Bitcoin in...

Uncategorized

Industry experts note that stablecoin regulations and banking access should take priority over cryptocurrency tax reforms in the U.S. Clear laws can encourage mainstream...

Cryptocurrency

Binance has added a new feature that lets users trade directly from CEX to DEX without having to bridge assets or move funds by...

Cryptocurrency

Decentralized finance has transformed our trading, borrowing, and lending. These services are now available to users directly, without middlemen. The popularity of DeFi is...

polkadot
Polkadot (DOT) $ 4.02 1.73%
bitcoin
Bitcoin (BTC) $ 82,869.20 1.07%
ethereum
Ethereum (ETH) $ 1,793.88 1.96%
cardano
Cardano (ADA) $ 0.649427 1.05%
xrp
XRP (XRP) $ 2.06 0.06%
stellar
Stellar (XLM) $ 0.260065 2.31%
litecoin
Litecoin (LTC) $ 83.32 0.04%