Justin Sun doubled down on claims that First Digital Trust was lax with the fiat backing of the TUSD stablecoin. Sun offered a $50M bounty for evidence of foul play and hidden funds.
Justin Sun, the founder of TRON, doubled down on his claims that First Digital Trust was being dishonest about handling the reserves of the TUSD stablecoin. Sun, who deposited $450M in stablecoins to bail out TUSD, offered a bounty of $50M for evidence of financial foul play.
‘I hereby officially announce: A $50 million bounty program will be established (approximately equivalent to 10% of the liquidity support I provided or the stolen TUSD reserves), aimed at recovering the TUSD reserves illegally misappropriated by First Digital Trust (FDT) and other wrongdoers,’ announced Sun in a thread on X.
Sun stated he would pay for verified information through whistle-blowers tracking fiat transactions or on-chain investigations where possible.
First Digital Trust was one of the custodians for the TUSD stablecoin, which de-pegged at one point. Sun then extended a loan, taking $500M in risk, to save the crypto ecosystem from a bigger contagion.
Techterys, the company that took over TUSD from its first creator, Trust Token, was exposed to risky investments and was unable to liquidate or withdraw its funds. This created the need for Sun’s involvement, which covered the financial hole of around $456M. As a result, TUSD de-pegged down to $0.95 in February, requiring a bridge loan to regain its position.
At the same time, FDT was accused of diverting a similar sum to the entity Aria Commodities DMCC instead of the intended Aria Commodity Finance Fund. Sun claimed that FDT used pre-existing loopholes in Hong Kong law to misappropriate funds. Sun drew attention to the company’s reports, which reveal negative equity in its annual reports, further supporting his claims that the stablecoin issuer is insufficiently capitalized.
First Digital Trust (FDT), A company with negative equity means its total liabilities exceed aggregate assets — in other words, it is practically financially insolvent. That’s why, under international banking regulations, banks are subject to stringent capital adequacy… pic.twitter.com/F5P4V1lJ2E
FDT still claims the risk for TUSD came from Techteryx and that the Trust remains solvent and capable of issuing and redeeming stablecoins as intended. The company attached an attestation report to prove its reserves for the stablecoin.
Sun added TUSD to the TRON network in 2022, sparking rumors of additional connections to Techteryx.
TUSD and FDUSD return to $1 range
Sun’s claims also spread to the backing of another stablecoin, FDUSD. The statements led to the temporary de-pegging of FDUSD to $0.87. However, First Digital Trust claimed this stablecoin was not linked to TUSD and was fully backed and transparent. Following the de-pegging event, FDUSDredeemed a total of 87M tokens with no issues. Despite this, Hong Kong prosecutors are still investigating all involved sides.
Currently, TUSD still exists with a circulating supply of over 495M. Despite this, the token’s trading volumes and usage are extremely low. Both TUSD and FDUSD were supported by Binance, becoming the key assets for its Launchpool campaigns. At one point, TUSD was discontinued from the launchpool, severely diminishing activity.
FDUSD also shows signs of being phased out. Binance now accepts other stablecoins for its launchpool campaigns, while the supply of FDUSD is down to 2.21B tokens from a peak of 4.3B 12 months ago. FDUSD is mostly minted and redeemed as Binance demands. The token’s mints and high turnover also coincided with some of the BTC rallies during the 2024 bull market. The tokens are not used in DeFi and are considered partially centralized.
For now, there is no direct evidence of lost funds or diverting the collateral of FDUSD. The token went through the stress test, with the markets still processing Sun’s claims. Previously, Sun himself has been accused of minting stablecoins with no transparent backing, as in the case of USDD. The TRON-based token also depegged by 18% back in 2020, and was subsequently phased out.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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