FDUSD, the stablecoin created by First Digital, a company based in Hong Kong, has deviated from its $1 price target amid growing investor worries about its reserves. Nevertheless, the firm stated on Wednesday that it remains “completely solvent.”
On Binance, where FDUSD is primarily traded, its value fell to 0.87 against Tether’s USDT and 0.76 against Circle’s USDC. The token later found some stability around $0.98, though it continued to trade below its intended price target.
This abrupt fluctuation followed reports that some of the reserves backing TrueUSD were currently tied up in illiquid investments. In response, Tron founder Justin Sun provided assistance to the issuer. First Digital Trust, which is connected to First Digital, has been tasked with overseeing TUSD reserves.
Sun alleged in a post that “First Digital Trust (FDT) is essentially insolvent and is unable to fulfill client fund redemptions. I strongly advise users to take immediate action to safeguard their assets.”
First Digital rejected these claims, asserting in a social media update that “First Digital is fully solvent,” and that “every dollar supporting FDUSD is completely secure, safe, and backed by U.S. Treasury Bills.”
They characterized Sun’s remarks as a “typical smear campaign” aimed at undermining a business competitor. “As we explained to the reporter, we haven’t had the chance to defend ourselves; instead of allowing the TUSD issue to be resolved through legal proceedings, Justin has opted for a coordinated social media attack against FDUSD,” the company stated. “FDT will take legal action to defend its rights and reputation.”
The most recent monthly reserve report for FDUSD indicated that the approximately $2 billion in reserve assets were primarily held in U.S. Treasury bills, with a smaller portion in repurchase agreements and fixed deposits.