- FDUSD depegged by 11% following insolvency rumors.
- Justin Sun questioned First Digital Trust’s ability to redeem funds.
- Market confidence in FDUSD issuer shaken amid speculation.
The stablecoin FDUSD faced a sudden drop from its dollar peg after concerns emerged about its issuer, First Digital Trust (FDT). Tron founder Justin Sun sparked the controversy, alleging that FDT might be insolvent and incapable of honoring client fund redemptions.
FDUSD, which is designed to maintain a 1:1 value with the U.S. dollar, depegged by over 11% shortly after Sun’s comments went public. The market reaction was swift, with traders offloading their FDUSD holdings due to fears that it might not be backed by fully redeemable reserves.
Justin Sun Sparks Market Panic
In a public post, Sun suggested that First Digital Trust was struggling with liquidity issues, raising alarm bells across the crypto community. His claims have not yet been confirmed by FDT, but the reputational damage was enough to rattle holders of FDUSD.
This isn’t the first time a stablecoin has come under fire. However, the speed and scale of FDUSD’s depeg is significant — highlighting just how quickly sentiment can shift in the digital asset space.
Market Awaits Official Response
At the time of writing, First Digital Trust has yet to release a formal statement addressing the insolvency rumors or the depeg. Analysts warn that silence could further undermine trust in FDUSD and put pressure on other products associated with FDT.
Investors are advised to monitor updates closely and consider diversifying their stablecoin exposure to mitigate risk. The situation continues to evolve rapidly.
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