Justin Sun Accuses First Digital Trust of Misappropriating $500M in FDUSD Reserves

Justin Sun, a prominent figure in the cryptocurrency world, recently accused First Digital Trust of misappropriating $500 million in reserve funds intended to back the FDUSD stablecoin. This accusation, made public through social media, sparked a significant debate within the digital asset community about the transparency and governance of stablecoins. Sun's claims suggested that First Digital had breached its fiduciary duties by taking a substantial amount of assets without authorization, thereby posing a risk to the broader stablecoin ecosystem.

First Digital Trust responded swiftly to the allegations. The company released an attestation report from an independent audit firm, Prescient Assurance, which confirmed that all FDUSD tokens in circulation are fully backed by fiat reserves held in segregated accounts. The report, covering the period up to April 14, 2025, provided a detailed breakdown of assets and liabilities, showing that the total fiat reserves held were equal to or slightly more than the issued amount of FDUSD. The report also confirmed that the custody accounts were segregated from operational funds and that there was no evidence of any unauthorized transfer of funds.

Despite the controversy, FDUSD remains operational and is reportedly fully collateralized. The incident has brought to light important issues regarding stablecoin transparency and corporate governance. The crypto community responded with a mix of sentiments, with many commending First Digital for its transparent reporting. However, some investors remained cautious due to the seriousness of the accusation. FDUSD briefly experienced larger-than-usual outflows, but there was no depeg observed. The stablecoin maintained its 1:1 peg on major exchanges, and trading volume of FDUSD pairs briefly increased. Some users moved assets to other stablecoins like USDC and TUSD, but FDUSD did not lose popularity among institutional users, and major platforms continued to support it.

Justin Sun's motive for the public allegation remains unclear, but the event has triggered various speculations within the community. Some believe it could be part of a deeper dispute between Tron-related projects and FDUSD developers, while others see it as a strategic move to shift attention away from Sun's own legal issues. In 2023, Sun and his affiliated companies were targeted by the U.S. Securities and Exchange Commission for allegedly selling unregistered securities and market manipulation. These legal issues remain pending and continue to tarnish his reputation.