FDUSD stablecoin regains dollar peg after falling
FDUSD depegs to $0.87 after Justin Sun insolvency claim.
Binance’s key stablecoin FDUSD briefly lost its $1 peg this week after a public claim from TRON founder Justin Sun triggered market panic.
The token, which has served as a primary source of liquidity across Binance’s major trading pairs, dropped as low as $0.87 before rebounding to above $0.99, reports Cryptopolitan.
At the center of the incident is a dispute between Sun and the token’s issuer, First Digital Trust (FDT), over allegations of insolvency.
Sun alleged that FDT could not honor redemptions of FDUSD, sparking a sharp sell-off and causing temporary chaos in the market. FDT quickly refuted the claims, insisting all tokens are fully backed by assets such as U.S. Treasury bills, and threatened legal action against Sun for spreading false information.
First Digital Trust Denies Claims as Market Reacts
According to market data, the FDUSD drop was short-lived, with key market participants like Wintermute stepping in to buy the dip. Wintermute reportedly acquired over 38 million FDUSD tokens at discount prices during the de-pegging event, potentially profiting up to $3 million after the token recovered.
FDT’s credibility had already come under scrutiny due to its previous association with the troubled stablecoin TrueUSD (TUSD), which Sun had to personally bail out for $450 million. A Hong Kong court is currently reviewing the handling of TUSD’s reserves. While FDUSD has not shown signs of similar financial instability, the event has nonetheless reignited concerns about transparency and centralized control in stablecoin markets.
FDUSD’s Role on Binance Raises Questions About Risk
FDUSD has become a foundational liquidity source on Binance, supporting high-volume trading pairs including BTC, BNB, and SOL. Its central role means even a brief de-pegging incident has outsized market effects. Critics note that despite its utility, FDUSD remains highly centralized and closely tied to Binance’s infrastructure, leaving users exposed to single-point failures.
Although Binance claims FDUSD reserves exceed liabilities at a 111% ratio, the episode has raised broader questions about how reliant crypto markets have become on proprietary stablecoins with limited external oversight.
Outlook
While FDUSD’s quick recovery minimized broader fallout, the incident underscores the volatility that can erupt from a single tweet and the systemic risks tied to centralized stablecoin issuers. As demand for transparency grows, exchanges like Binance may face mounting pressure to disclose more details on token backing and issuer governance. Until then, traders are left to navigate trust-based systems where the next de-pegging event could be only one rumor away.
Recently we wrote, that the global stablecoin market may be on the verge of explosive growth, potentially quadrupling to $1 trillion by the end of 2025, according to CoinFund managing partner David Pakman.
