Justin Sun, founder of the Tron blockchain, has accused First Digital Trust (FDT) of misappropriating $500 million in client reserve funds, leading to a significant depeg of the stablecoin FDUSD. Sun claims that FDT, which manages the reserves for both TrueUSD (TUSD) and FDUSD, is insolvent and unable to process client redemptions. This situation prompted Sun to quietly bail out TUSD after $456 million in reserves became illiquid due to the actions of Aria Capital Mgt and Aria Commodity Finance Fund, managed by Matthew Brittain and his spouse Cecilia Brittain respectively.

Following Sun's allegations, FDUSD experienced a depeg, dropping to as low as $0.89 before recovering to $0.987. Sun has called for changes to Hong Kong's laws around trusts, citing systemic loopholes that allowed the alleged fraud to occur. He urged Hong Kong regulators to take decisive action to safeguard the city's financial reputation.

First Digital Trust has denied Sun's claims, asserting that it has fulfilled its fiduciary duties and complied with instructions from Sun and his nominees at Techteryx. FDT's CEO, Vincent Chok, stated that the company is still solvent and capable of fulfilling FDUSD redemption obligations despite KYC and AML issues. FDT plans to pursue legal action against Sun for his allegations and has provided on-chain data showing redemptions going through.

In response to the depeg, trading firm Wintermute transferred 75 million FDUSD to First Digital Labs, likely taking advantage of discounted prices and redeeming the tokens at a 1:1 ratio for profit. Binance has released an attestation report confirming FDUSD's full 1:1 backing, reaffirming its commitment to keeping users informed.