FDUSD Falls to $0.87 After Justin Sun Insolvency Claim Shocks Market

Key Points

• FDUSD Falls to $0.87 After Justin Sun Insolvency Claim Shocks Market
• FDUSD, another FDT stablecoin, briefly depegs to $0.87
• Wintermute pulls $30M from FDUSD, spurring panic withdrawals
• Binance’s Yi He calls for an independent audit of FDUSD

The crypto world was rattled this week when TRON founder Justin Sun publicly accused First Digital Trust (FDT) of being insolvent—specifically over its TUSD stablecoin. While the lawsuit focuses on TUSD, the collateral damage hit another stablecoin, FDUSD, which sharply depegged to $0.87 in the aftermath.

Sun’s statement painted a bleak picture of FDT’s operations and called for regulators to take urgent action:

Protect users and protect HK

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. There are significant loopholes in both the trust licensing process in…

— H.E. Justin Sun 🍌 (@justinsuntron) April 2, 2025

These comments brought back memories of a prior case where First Digital settled with the SEC, after it was revealed that 99% of TUSD reserves were tied to risky investments. This only amplified the credibility of Sun’s allegations in the eyes of many investors.

However, despite the legal firestorm surrounding TUSD, the stablecoin’s price remained stable. It was FDUSD, another product from the same company, that took the major hit—experiencing a brief but sharp depeg to $0.87, sparking a wave of uncertainty in the stablecoin ecosystem.

🚨BREAKING🚨

JUSTIN SUN SAYS FIRST DIGITAL TRUST IS FACING FINANCIAL STRUGGLES, RESULTING IN A DROP OF OVER 8% IN $FDUSD

IT’S NOW BACK AT $0.98 pic.twitter.com/iHihYVbkQW

— Evan Luthra (@EvanLuthra) April 2, 2025

Market Reaction: From Withdrawals to Audit Demands

FDUSD’s sudden drop wasn’t just a price blip—it revealed how fragile confidence is in the stablecoin sector. Major trading firm Wintermute quickly reacted to Sun’s announcement by pulling $30 million worth of FDUSD from Binance. That move alone intensified market panic and added more pressure on First Digital.

The situation escalated further when Yi He, Binance’s co-founder, stepped in. While distancing FDUSD from Sun’s claims, she acknowledged the seriousness of the situation and proposed that Binance conduct an independent audit of FDUSD’s reserves:

The recent allegations by Justin Sun against First Digital Trust are completely false.

This dispute is with TUSD and not with $FDUSD. First Digital is completely solvent.

Every dollar backing $FDUSD is completely, secure, safe and accounted for with US backed T-Bills. The…

— First Digital (@FirstDigitalHQ) April 2, 2025

First Digital responded with a strong denial, calling the accusations baseless and warning of legal action:

“This is a typical Justin Sun smear campaign to try to attack a competitor. First Digital is completely solvent.”

This back-and-forth mirrors other recent market scares like the Upcx hack that exposed a critical security flaw or Bitcoin ETF outflows surging to $222M, where trust and transparency—or lack thereof—directly impact investor behavior.

First Digital USD (FDUSD) Price Performance. Source: CoinGecko.

The Bigger Picture: Trust in Stablecoins on the Line

The fallout from the Justin Sun insolvency claim is more than just a PR crisis—it’s a stress test for the entire stablecoin ecosystem. The fact that FDUSD, unrelated to the lawsuit, took such a heavy hit shows how deeply intertwined trust and market value are in crypto.

In today’s market, stablecoins are the lifeblood of on-chain liquidity and DeFi activity. When that trust is shaken, it creates ripple effects that reach well beyond a single token. That’s why calls for independent audits, transparent reserve backing, and stricter compliance are growing louder.

This isn’t happening in isolation. We’re also seeing tokenized gold hitting $1.2B as investors seek safer alternatives, and AI Agent tokens surging in popularity as new narratives emerge in Web3. The rotation of capital away from high-risk assets is real—and these events are accelerating it.

The crypto industry is evolving rapidly, and stablecoins are under pressure to evolve too. From regulatory clarity to transparency in audits, these challenges are pushing the space closer to traditional finance standards.

What’s Next for FDUSD and the Industry?

While FDUSD has since recovered its peg, the long-term consequences of this controversy remain uncertain. The legal battle between Justin Sun and First Digital is only getting started. If regulators get involved, and if audits reveal any discrepancies, we could see major restructuring in the stablecoin market.

It’s also a reminder of how influential major players like Sun still are. A single public claim can wipe millions from the market—proving once again that narrative drives crypto as much as fundamentals do.

Meanwhile, platforms like Binance must juggle their support of stablecoins like FDUSD with demands from their users for greater transparency. Given the increasing overlap between crypto and institutional finance—highlighted by moves like the Spot BNB ETF filing by VanEck—the pressure to act more like banks is only going to grow.

As the dust settles, the industry will be watching closely. Will FDUSD regain full confidence? Will regulators step in? And will Justin Sun’s insolvency claim mark the beginning of tighter standards across the board?

One thing’s for sure: the era of opaque stablecoins may be coming to an end.