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First Digital Labs Confirms FDUSD Stablecoin Backing Amid Fraud Accusations

First Digital Labs has released an attestation report verifying that its FDUSD stablecoin is fully backed, addressing recent fraud allegations from Tron founder Justin Sun. The report highlights the company’s commitment to transparency and accountability in the cryptocurrency space.

Reserve Details

The attestation report, dated April 14, confirms that reserves of equal value back the FDUSD stablecoin. These reserves include over $1.74 billion in U.S. Treasury bills and $603 million held in overnight repurchase agreements. Additionally, fixed deposits across various jurisdictions contribute to the stablecoin’s backing.

With a total supply of 2.58 billion tokens, First Digital Labs emphasized that all FDUSD reserves are held in bankruptcy-remote accounts, ensuring they are not mingled with company funds. The company also revealed that over $1 billion worth of FDUSD has been redeemed without any incidents.

Fraud Allegations by Justin Sun

Just days before the report’s release, Justin Sun accused First Digital Trust of embezzling nearly $500 million in client funds. Sun alleged that a network of partners, including Dubai-based Aria DMCC, manipulated the stablecoin issuer into transferring funds to an unrelated entity. He claims the funds were redirected through a fraudulent address switch, with a portion deposited into a Hong Kong account named “Glass Door.”

“This is a major international financial fraud comparable to a classic crypto wallet exploit,” Sun stated.

Sun named several individuals he believes were involved in the scheme and hosted a livestream to present his evidence. He also met with Hong Kong regulators to discuss the matter. The controversy caused FDUSD to briefly lose its peg, dropping as low as $0.87 before recovering to $0.99 at the time of writing.

First Digital Trust’s Response

First Digital Trust has strongly denied all accusations, calling the claims baseless. The company has initiated a defamation lawsuit in Hong Kong’s High Court, seeking to prevent Sun from repeating the allegations and demanding retractions and damages.

In its defense, First Digital Trust reiterated its commitment to financial transparency, accountability, and client asset protection. The firm stated it will continue publishing regular attestation reports and working with independent auditors to ensure the stability and trustworthiness of FDUSD.

FDUSD’s Role in the Crypto Ecosystem

Issued by FD121 Limited and managed by First Digital Trust, FDUSD is a fiat-backed, regulated stablecoin gaining popularity among cryptocurrency users. It is currently available on Ethereum, BNB Chain, Solana, and Sui, providing users with diverse options for trading and transactions.

As the legal dispute unfolds, First Digital Trust assures its users that it will maintain transparency and uphold its dedication to client protection.

Tips for Navigating Stablecoin Investments

If you’re new to investing in stablecoins like FDUSD, consider the following:

  • Research Transparency: Choose stablecoins with audited reserves and regular attestation reports.
  • Understand Risks: Although stablecoins aim for price stability, external factors may cause temporary depegging.
  • Diversify Investments: Avoid placing all your funds into a single asset; diversify across different cryptocurrencies and stablecoins.
  • Monitor Legal Developments: Stay informed about disputes or controversies involving issuers, as they may impact token performance.

As the cryptocurrency market evolves, ensuring the stability and security of your investments is essential. Stay updated on developments within the stablecoin sector to make informed decisions.

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