In a shocking development, Justin Sun, a well-known figure in the Tron (TRX) community, has brought to light the insolvency of First Digital Trust (FDT), a tech-based financial institution situated in Hong Kong. Sun’s revelation came through an X post on April 2nd, uncovering a significant loophole in FDT’s internal risk management and the trust licensing process in Hong Kong.
Expressing his concerns, Sun called upon regulators and law enforcement to swiftly address the issues at hand and prevent further financial losses. He emphasized the importance of safeguarding Hong Kong’s reputation as a global financial hub and ensuring that similar incidents of financial fraud do not occur in the future.
In response to the unfolding crisis, Sun announced plans to hold a press conference on April 3 to provide further updates and insights.
Market Impact
Following Sun’s announcement, FDUSD, a fiat-backed stablecoin supported by Binance exchange, experienced a 2 percent drop in value, trading at around 97 cents. The mid-cap stablecoin, with a valuation of approximately $2.54 billion and a daily trading volume of $6.9 billion, depegged for the first time, plummeting to as low as 91 cents before Yi He intervened to clarify the situation.
Yi He, co-founder of Binance, disclosed that Sun is pursuing legal action against TrueUSD (TUSD), a stablecoin with a market valuation of $495 million and a daily trading volume of $56 million. He reassured customers that Binance is actively monitoring the situation to ensure the safety of their assets.
In a series of tweets, Yi He highlighted Binance’s commitment to conducting regular fund checks and implementing robust risk control measures. He also mentioned Binance’s efforts to investigate the situation surrounding FDUSD and make informed decisions to protect their customers’ interests.
As the situation continues to unfold, the cryptocurrency community awaits further updates and actions to address the challenges posed by FDT’s insolvency. Stay tuned for more developments as the story evolves.