The first digital redeemed nearly $26 million in Stablecoin’s withdrawal after the FDUSD token temporarily lost its US dollar peg following a bankruptcy filing by Tron founder Justin Sun.
The first digital USD (FDUSD) was discontinued on April 2nd, bringing it to $0.87 for a short time, after Sun claimed that the first digital was insolvent.
On April 4, Sun doubled his claim, claiming that the company transferred more than $450 million in customer funds to a Dubai-based entity, violating Hong Kong securities regulations.
sauce: He is Justin Sang
“FDT has transferred $456 million in custody without permission to a private company in Dubai and has not yet returned the money,” Sun claimed.
Despite allegations, Etherscan Shows First Digital’s blockchain data has celebrated approximately $25.8 million in FDUSD reimbursement since the incident.
FDUSD redemption. sauce: Etherscan
“We continue to process redemption smoothly and demonstrate the fortitude of $FDUSD,” the first digital said in the X-Post on April 3rd.
When a user redeems the FDUSD in USD, the corresponding amount of FDUSD burns on-chain to ensure Stablecoin maintains a one-to-one peg in USD and circulating supply matches the reserve.
Related: WinterMute will transfer $75 million in FDUSD since DEPEGS.
Following Sun’s claim, First Digital ensured that it was a solvent and that FDUSD remains fully supported and redemptive.
sauce: First Digital
“First Digital Stands Firm: Justin Sun’s unfounded accusations will not be distracted from Techteryx’s own mistakes. Our Stablecoin FDUSD remains a completely backed solvent.”
Related: Once FREB moves to QE, the Bitcoin price could reach $250,000 in 2025: Arthur Hayes
Stablecoin Depeg “has greater body risk” than Bitcoin crashes
Stablecoins Depegs poses “larger systematic risks” to cryptography than Bitcoin (BTC) crashes, as Stablecoins are essential for liquidity, Defi and user trust.
Stablecoin Depegs could cause “cascade disorders like the Terrausd collapse of 2022.”
“Current transparency, quality of collateral and accountability among key stable coin issuers are inadequate. The lack of a full audit of Tether, USDC’s exposure to banking risks, and the stability of the algorithm highlight market vulnerabilities to the next DEPEG event.”
“To mitigate risk, the market needs to conduct real-time audits, prioritize high-quality collateral like the US Treasury Department, diversify the use of stubrecoin to increase regulatory oversight and reduce reliance on some dominant players,” Chen added.
In May 2022, the $40 billion terra ecosystem collapsed, eliminating the value of tens of thousands of dollars by billions. Terra’s algorithm Stablecoin, Terrausd (UST), produced an annual rate of over 20% (APY) in the anchor protocol before its collapse.
As UST lost its dollar peg and crashed into a minimum of $0.30, Terraform Labs co-founder Do Kwon took him to X (Then Twitter) to share his rescue plan. At the same time, the value of Sister Token Luna (a former top ten crypto projects by market capitalization) plummeted to $0.84, exceeding 98%. Luna traded north at $120 in early April 2022.
https://www.youtube.com/watch?v=abn8nvgdw34
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