Tron Founder Accuses FDT of $456M Fraud, $FDUSD Plummets 13%

On the evening of April 2, 2025, the cryptocurrency world was rocked by a bombshell accusation from Justin Sun, the founder of the Tron crypto project. Sun alleged that First Digital Trust (FDT), the issuer of the stablecoin $FDUSD, had engaged in fraudulent activities, misappropriating $456 million in funds related to the management of the reserves backing another stablecoin, $TUSD.

This accusation sent shockwaves through the market, causing the price of $FDUSD to plummet. The stablecoin, which is used for various applications and trading on the exchange Binance, dropped to nearly $0.87 before slowly recovering. The depegging of $FDUSD led to a significant loss of trust within the crypto community, as users and investors questioned the stability and reliability of the stablecoin.

The initial fallout from Sun’s accusations was swift and severe. Panic selling ensued, and the price of $FDUSD fell well below its usual $1 peg. On Binance, the digital asset dropped as low as $0.87 and, according to some reports, dipped to $0.76 when compared to USDC. The sudden depeg sent shockwaves through the platform and across the wide range of users affected by the digital assets built on top of it, especially those in the Launchpool.

The situation began to stabilize when Binance co-founder Yi He stepped in to address the concerns. He clarified that the matter causing the depeg wasn’t about reserves related to $FDUSD but rather about a legal dispute concerning $TUSD. Yi He explained that the allegations about mismanagement had to do with FDT mismanaging the reserves of $TUSD, and not with any issues pertaining to $FDUSD itself. With this clarification, the market seemed to calm down, and the price of $FDUSD made a rebound to $0.987, nearly back to its usual pegged value.

Even with the recovery in prices, the market’s confidence was severely shaken. Many associated with the crypto world speculated that the clear lack of immediate transparency had allowed insiders or whales to buy up FDUSD at a severely discounted price. The treatment of retail investors became a major flashpoint in the $FDUSD saga, as traders and users felt strongly that Binance dropped the ball on timely communication. The event raised serious questions about the transparency and accountability of big exchanges, especially during times of crisis.

The dispute between Justin Sun and FDT centered around the allegation that FDT had mismanaged funds related to $TUSD. Sun claimed that FDT had turned $456 million in reserves into a risky bond portfolio, making $TUSD unstable. FDT, however, insisted that it had done nothing wrong and that $FDUSD was sound, underpinned 1:1 by dollars. The public remained skeptical, and many began to doubt both FDT and Binance.

The fallout from the $FDUSD flash crash has left investors questioning the coin’s stability and FDT’s future. The court proceedings look set to keep $FDUSD’s conversation as its main ongoing narrative. Until more clarity is achieved, the coin’s market participants will remain on edge. The situation with $FDUSD on April 2 has shown that trust in the cryptocurrency market, especially around stablecoins, is very tenuous. The market behavior witnessed with $FDUSD raises serious concerns about a lack of transparency and effective communication in the cryptocurrency market.

The stablecoin market is likely to face lasting fallout from the ongoing lawsuit and additional probes into FDT’s management of the $TUSD reserves. As the crypto space continues to evolve, trust remains the single most important quality a project can possess. Any project in the stablecoin space must be especially trustworthy, as the very essence of a stablecoin is that it is a safe harbor for a trusted cryptocurrency.