FDUSD Depegged by 11% Following Insolvency Rumors

Justin Sun questioned First Digital Trust’s ability to redeem funds. Market confidence in FDUSD issuer shaken amid speculation.

The stablecoin FDUSD experienced a sharp decline from its dollar peg on Monday after rumors of its issuer, First Digital Trust (FDT), being insolvent surfaced. Tron founder Justin Sun's post on the matter sparked the concerns.

FDUSD, which is designed to maintain a 1:1 value with the U.S. dollar, depegged by over 11% following Sun's comments. The market quickly reacted by dumping their FDUSD holdings as trust in the stablecoin was shaken.

In his post, Sun questioned First Digital Trust's ability to redeem funds from clients fully, suggesting that the issuer might be struggling with liquidity issues. His claims have not yet been confirmed by FDT.

"Is First Digital Trust truly bankrupt and unable to handle client fund redemptions?" Sun asked in a public post.

This isn't the first time a stablecoin has come under a rumor of insolvency. However, the speed and scale of FDUSD's depeg are noteworthy, highlighting how quickly sentiment can shift in the digital asset space.

FDUSD Depegged It depegged 11% after Justin Sun raised the concern about First Digital Trust (FDT) being insolvent and unable to fulfill client fund redemptions.

#FDUSD is issued by First Digital Trust.https://t.co/07y64aZ8z6pic.twitter.com/zDyYrogQOu

— Sumit (@sumit__btc) April 2, 2025

While there are reports of FDT being insolvent, the company has yet to release a statement to address the rumors or the depeg.

If true, this could put pressure on other products associated with First Digital Trust as silence might lead to less trust in their products and services.

Investors are advised to keep an eye on any updates and perhaps diversify their stablecoin exposure to mitigate risk. The situation continues to develop.