The crypto market received a shock on April 2, 2025, as FDUSD's value unexpectedly dropped to $0.87. This 13% deviation from its expected $1 peg came after Tron founder Justin Sun made claims about insolvency. The stablecoin's market cap fell by $130 million and created ripples throughout the crypto community.

The total supply stands at $2.2 billion, and Binance handles most of its trading volume. This whole ordeal raised serious questions about the stablecoin's stability and backing. FDUSD's issuer, First Digital Trust, stands firm that US Treasury Bills fully secure every dollar. The stage was set for a complex controversy that would unfold over the coming days.

Our breakdown reveals what happened during the FDUSD depeg to explore the allegations, responses, and how this major crypto event affected the market.

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What Is FDUSD and How Did It Depeg?

First Digital USD (FDUSD) launched in June 2023 as a stablecoin that keeps a steady 1:1 peg with the US dollar. The stablecoin backed by high-quality reserves like US Treasury bills became popular on Ethereum and BNB Chain networks.

Understanding FDUSD stablecoin basics

FD121 Limited, a Hong Kong-based First Digital Limited subsidiary, issues FDUSD as a reserve-backed stablecoin. The stablecoin maintains security and stability through three core mechanisms:

1. Full backing by cash and cash equivalents held by regulated custodians
2. Monthly third-party attestations verifying reserves
3. Assets legally segregated to protect funds from external risks

FDUSD had grown to become the world's fifth-largest stablecoin before April's disruption. The stablecoin held about $2 billion in reserve assets, mostly in US Treasury bills.

Timeline of the April 2025 depeg event

The crisis unfolded on April 2, 2025, through these events:

• Original trigger: Tron founder Justin Sun claimed First Digital Trust couldn't pay back client funds due to insolvency
• Market reaction: Wintermute, a major market maker, pulled over $30 million FDUSD from Binance accounts
• Price collapse: FDUSD's value dropped sharply after Sun's statement
• Recovery begins: FDUSD bounced back to a 1:0.99 ratio against USDT by April 3

Sun's claims came with his lawsuit against Trust Digital about the firm's inability to maintain its peg. His comments also followed Techteryx's lawsuit against First Digital CEO Vincent Chok.

How low did the FDUSD price actually fall?

The depeg led to price swings across trading pairs:

• Against USDT: Dropped to $0.87
• Against USDC: Hit $0.76 on Binance
• BTC/FDUSD pair: Bitcoin jumped to about $99,000 as the stablecoin weakened

The price disruption erased $130 million from FDUSD's market cap. The stablecoin's price stabilized to $0.98-$0.96 within 24 hours. Lookonchain data showed market makers made $3 million through arbitrage by buying discounted tokens.

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Justin Sun's Allegations Against First Digital Trust

Justin Sun, the founder of Tron, sparked the FDUSD crisis with a single explosive social media post. His public attack on First Digital Trust turned faster into a market-moving event that disrupted the stablecoin ecosystem.

The insolvency claims on social media

On April 2, 2025, Justin Sun shook the crypto community with a stark warning on X (formerly Twitter). "First Digital Trust (FDT) is effectively insolvent and unable to fulfill client fund redemptions," Sun declared. "I strongly recommend that users take immediate action to secure their assets." His post gained substantial traction within hours and sent FDUSD's value plummeting.

Sun expanded his criticism beyond First Digital's solvency. He targeted Hong Kong's financial regulatory framework directly. "There are significant loopholes in both the trust licensing process in Hong Kong and the internal risk management of its financial system." He called on regulators and law enforcement to "take swift action" and claimed Hong Kong's status as a global financial center hung in the balance.

Connection to the TrueUSD dispute

Sun's allegations came at a telling moment. Court filings had just revealed his role in providing emergency liquidity to Techteryx's TrueUSD (TUSD) stablecoin after approximately $456 million in reserves became trapped in illiquid investments.

The reserves had moved from their planned destination—Aria Commodity Finance Fund—to Aria Commodities DMCC, a Dubai-based entity, without proper authorization. First Digital Trust, TUSD's fiduciary manager for reserves, helped this transfer happen.

The plaintiffs labeled these transactions as misappropriation and misrepresentation. Past tensions between First Digital Trust and Techteryx, the TUSD issuer with reported links to Sun, seemed to fuel this controversy.

Sun claimed he "got involved with the project to stabilize the crypto market" to prevent its collapse. First Digital responded swiftly and defended itself against what they called a "typical Justin Sun smear campaign."

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First Digital's Response to the Crisis

First Digital Trust quickly defended its stablecoin after Sun's accusations. The company acted fast to address market fears that caused FDUSD's value to drop.

Official statements refuting insolvency

First Digital Trust posted a strong message on X (formerly Twitter) that rejected all of Justin Sun's claims. "First Digital is completely solvent," the statement said, which directly challenged Sun's claims about insolvency. The company explained that Sun was actually talking about TrueUSD (TUSD), a different stablecoin, not FDUSD.

"Justin Sun's latest allegations against First Digital Trust are completely false," the company claimed. They saw these accusations as misleading and inappropriate. The company pointed out that Sun went to social media before they had a chance to defend the TUSD case in court.

Evidence of backing with US Treasury bills

First Digital shared specific details about FDUSD's reserves to stop rumors about insufficient backing:

• The stablecoin is fully backed by US Treasury bills and cash equivalents
• Monthly third-party attestations verify all reserves
• The exact ISIN (International Securities Identification Numbers) for all reserves are transparently documented in attestation reports

Their latest monthly reserve report showed FDUSD had approximately $2.55 billion in reserves backing $2.54 billion in circulation, showing a 100.5% collateralization ratio. US Treasury bills maturing in less than three months made up most of the reserves (78.7% or $2 billion), and the rest was in cash deposits and fixed deposits.

Legal action threats against Justin Sun

First Digital Trust didn't just deny the claims - they got ready to fight back. The company said they would "pursue legal action to protect its rights and reputation" against what they called a "typical Justin Sun smear campaign."

The company believed Sun tried to "attack a competitor to his business." They saw this as a coordinated effort on social media to hurt FDUSD instead of handling the TUSD matter through proper legal channels.

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Market Makers and Arbitrage Opportunities

The market panicked, but smart traders saw the FDUSD depeg as a perfect chance for arbitrage. The stablecoin's value dropped, and market makers were quick to take advantage of the price differences.

Wintermute's $75 million FDUSD transfers

Market maker Wintermute executed a notable strategy during this event. The firm pulled 31.36 million FDUSD from Binance right after prices started falling. Blockchain intelligence platform Lookonchain later reported that Wintermute moved 75 million FDUSD tokens back to First Digital in just one day after the depeg. These quick fund movements showed a thought-out arbitrage plan rather than panic selling.

How traders profited from the temporary depeg

The profit strategy worked in a simple way. Market makers bought FDUSD at substantial discounts—as low as $0.87-$0.90—during the depeg. They redeemed these tokens through First Digital at full 1:1 value and secured big profits. Analysts estimate that Wintermute could have made over $3 million once FDUSD returned to its peg, assuming they bought near the bottom.

This chance created a trading surge on exchanges:

• FDUSD/USDT trading on Binance jumped 350% in the first hour
• Kraken's FDUSD/BTC saw a 220% volume spike
• Traders moved over 100 million FDUSD between wallets in three hours

Recovery patterns in FDUSD price

FDUSD showed amazing resilience. The stablecoin bounced back fast and reached $0.99 against USDT by April 3 morning. Binance prices recovered quickly, with FDUSD hitting $1.00 by 12:30 PM UTC. The FDUSD/BTC pair on Kraken took more time to stabilize and reached $0.99 by 2:00 PM UTC.

Technical indicators captured this volatility. The Relative Strength Index (RSI) for FDUSD/USDT on Binance hit 85 before settling at 60 by mid-afternoon.

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Final Thoughts

FDUSD's April 2025 depeg event is a stark reminder of the fragility of stablecoins and the level of trust their holders must place in centralized entities. While Justin Sun’s allegations sparked a brief panic, First Digital Trust's response and its demonstrated reserves in U.S. Treasury bills helped stabilize the situation. Market makers like Wintermute capitalized on arbitrage opportunities, reinforcing the fact that volatility—even in so-called "stable" assets—creates winners and losers.

However, this incident underscores a fundamental truth about stablecoins: they are not decentralized, immutable, or permissionless like Bitcoin. They are merely tokenized liabilities of an issuing entity that claims to maintain full or high-level reserves. Investors should always remember that stablecoin issuers require trust, transparency, and responsible management—qualities that history has shown are not guaranteed.

Even when issuers provide "proof of reserves," these attestations do not paint the full picture. The backing assets may be subject to legal risks, rehypothecation, or undisclosed liabilities. This is precisely why Bitcoin and other cryptocurrencies emphasize decentralization and immutability—so that no single entity holds the power to manipulate supply or access.

For those who hold stablecoins, this event should serve as a wake-up call. Beyond relying on official statements and attestations, investors must actively research, question the underlying mechanisms, and remain fully aware of the risks involved. The next stablecoin depeg may not resolve as quickly—or as favorably—as FDUSD’s did.

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