The downturn in FDUSD's value coincides with remarks from Justin Sun, founder of the Tron blockchain, who hinted at potential financial instability within First Digital Trust. Sun's statements have intensified scrutiny of the firm's financial health and its capacity to uphold the stablecoin's peg.
First Digital Trust launched FDUSD in June 2023, aiming to provide a stable digital currency backed by equivalent U.S. dollar reserves. The stablecoin quickly gained traction, achieving a market capitalization of $3.85 billion by May 2024. Its rapid adoption was bolstered by strategic partnerships and listings on major cryptocurrency exchanges, including Binance.
However, the stablecoin's stability has been questioned following its recent depegging. Market participants are particularly concerned given the backdrop of previous stablecoin failures, such as the collapse of TerraUSD , which had far-reaching implications for the cryptocurrency market.
Adding to the apprehension are FDUSD's ties to Justin Sun. Reports suggest that Sun has affiliations with FDUSD through various ventures, including TrueUSD , another stablecoin that has faced depegging issues. Sun's involvement has led to speculation about the influence he may wield over FDUSD's operations and stability.
In response to the depegging, First Digital Trust has maintained that FDUSD is fully backed by reserves and that the deviation is a temporary market fluctuation. The firm asserts that measures are being taken to restore the peg and reassure investors of the stablecoin's reliability.
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Cryptocurrency