Tron founder Justin Sun issued a warning to crypto users, indicating potential insolvency issues at First Digital Trust, which could affect the TrueUSD stablecoin's stability.
Justin Sun's Statement Details
Justin Sun warned that First Digital Trust, previously responsible for managing TrueUSD reserves, is effectively insolvent and unable to redeem funds. His statement came in response to a CoinDesk report on a legal battle between TUSD issuer Techteryx and FDT.
Reaction and Market Impact
Following Sun's warning, the market reacted with anxiety, and the FDUSD stablecoin, issued by a separate First Digital division, fell by 9%, wiping out $130 million in market cap. However, First Digital quickly denied these claims, calling them part of a smear campaign.
Legal Dispute and First Digital Trust's Response
The conflict arose from Techteryx's lawsuit, accusing FDT of mismanaging TUSD funds by investing in unauthorized illiquid assets, leading to financial shortcomings. Techteryx claims the funds were diverted into unregulated vehicles, alleging this mismanagement as the root cause of their financial issues.
The situation surrounding First Digital Trust and Justin Sun's allegations has raised concerns in the crypto market. Market participants and project founders are closely monitoring the conflict's outcome and potential regulatory actions.
