{"id":20596,"date":"2025-04-04T12:31:35","date_gmt":"2025-04-04T12:31:35","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=20596"},"modified":"2025-04-04T12:31:35","modified_gmt":"2025-04-04T12:31:35","slug":"first-digital-redeems-26m-after-fdusd-depeg-dismisses-sun-insolvency-claims","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=20596","title":{"rendered":"First Digital redeems $26M after FDUSD depeg, dismisses Sun insolvency claims"},"content":{"rendered":"
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First Digital has redeemed almost $26 million in stablecoin withdrawals after its FDUSD token briefly lost its US dollar peg following allegations of insolvency by Tron founder Justin Sun.<\/p>\n

First Digital USD (FDUSD<\/a>) depegged on April 2, briefly falling as low as $0.87 after Sun claimed that First Digital was insolvent.<\/p>\n

On April 4, Sun doubled down<\/a> on his allegations, claiming the firm transferred over $450 million of customer funds to a Dubai-based entity and that it violated Hong Kong securities regulations.<\/p>\n

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Source: <\/em>H.E. Justin Sun<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

\u201cFDT transferred $456 million of its custodial clients to a private company in Dubai without their authorization and has not yet returned the money,\u201d Sun claimed.<\/p>\n

Despite the claims, blockchain data from Etherscan shows<\/a> First Digital has honored approximately $25.8 million in FDUSD redemptions since the incident.<\/p>\n

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FDUSD redemptions. Source: <\/em>Etherscan<\/em><\/a>\u00a0<\/em><\/p>\n<\/figcaption><\/figure>\n

\u201cWe continue to process redemptions smoothly, demonstrating the fortitude of $FDUSD,\u201d noted First Digital in an April 3 X post<\/a>.<\/p>\n

When users redeem FDUSD for US dollars, the corresponding amount of FDUSD is burned onchain for the stablecoin to maintain a 1-to-1 peg with the US dollar and ensure the circulating supply matches reserves.<\/p>\n

Related: <\/strong><\/em>Wintermute transfers $75M FDUSD since depegs, in $3M arbitrage opportunity<\/strong><\/em><\/a><\/p>\n

Following Sun\u2019s claims, First Digital assured users that it is solvent and that FDUSD remains fully backed and redeemable.<\/p>\n

\"First
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Source: <\/em>First Digital<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

\u201cFirst Digital stands firm: Justin Sun\u2019s baseless accusations won\u2019t distract from Techteryx\u2019s own failures\u2014 our stablecoin FDUSD remains fully backed and solvent,\u201d First Digital stated in an April 3 X post<\/a>.<\/p>\n

Related: <\/strong><\/em>Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur Hayes<\/strong><\/em><\/a><\/p>\n

Stablecoin depegs \u201cgreater systemic risk\u201d than Bitcoin crash<\/h2>\n

Stablecoins depegs pose \u201ca greater systemic risk\u201d to crypto than a Bitcoin (BTC<\/a>) crash, as \u201cstablecoins are integral to liquidity, DeFi and user trust,\u201d according to Gracy Chen, CEO of Bitget.<\/p>\n

Stablecoin depegs can cause \u201ccascading failures like the TerraUSD collapse in 2022,\u201d Chen told Cointelegraph, adding:<\/p>\n

\u201cCurrent transparency, collateral quality and accountability among leading stablecoin issuers are insufficient \u2014 Tether\u2019s lack of full audits, USDC\u2019s exposure to banking risks and algorithmic stablecoins\u2019 fragility highlight the market\u2019s vulnerability to the next depeg event.\u201d<\/p><\/blockquote>\n

\u201cTo mitigate risks, the market should enforce real-time audits, prioritize high-quality collateral like US Treasurys, strengthen regulatory oversight and diversify stablecoin usage to reduce reliance on a few dominant players,\u201d Chen added.<\/p>\n

In May 2022, the $40 billion Terra<\/a> ecosystem collapsed, erasing tens of billions of dollars of value in days. Terra\u2019s algorithmic stablecoin, TerraUSD (UST), had yielded an over 20% annual percentage yield (APY) on Anchor Protocol before its collapse.<\/p>\n

As UST lost its dollar peg, crashing to a low of around $0.30, Terraform Labs co-founder Do Kwon<\/a> took to X (then Twitter) to share his rescue plan. At the same time, the value of sister token LUNA \u2014 once a top 10 crypto project by market capitalization \u2014 plunged over 98% to $0.84. LUNA was trading north of $120 in early April 2022.<\/p>\n