Binance, the leading crypto exchange, has added a new stablecoin to its platform – First Digital USD (FDUSD) today. The stablecoin, issued by First Digital Trust, a Hong Kong-based digital asset custodian, has attracted attention and sparked controversy within the crypto community. With allegations linking FDUSD to Justin Sun who is also allegedly behind TrueUSD (TUSD), the launch has left traders and investors questioning its credibility.
On June 1, First Digital Group announced the launch of FDUSD, a stablecoin pegged to the U.S. dollar. Initially issued on the Ethereum and Binance Smart Chain (BNB) networks, the stablecoin aims to provide users with a reliable and efficient means of conducting transactions. Data shows that the current total circulation of FDUSD is only about 10.11 million, almost all (more than 99.9%) are stored in Binance wallet addresses.
Allegations Against Binance & Justin Sun
Crypto researcher and outspoken critic of Binance and Justin Sun, Adam Cochran, was quick to react to the news of FDUSD’s launch. He raised concerns about the custodian behind the stablecoin and its possible connection to Justin Sun. Cochran went on to suggest that FDUSD’s custodian might issue the stablecoin without sufficient asset backing, raising doubts about its true value. Adam Cochran’s tweet reads:
This [FDUSD] is issued by the sketchy ass custodian that Justin Sun uses for TUSD. They issue against value, not assets. So like illiquid paper equity, goodwill, Justin Sun’s promises, etc.
The researcher goes on to claim that “it’s really just them [Sun and Binance CEO Changpeng Zhao] trying to rebrand the SunCZ ponzi here.” In fact, Cochran is willing to bet “in the coming months TUSD starts to migrate to this and it starts getting special treatment from Binance just a protective layer now that Sun and CZ have been called out. It’s like a condom for your stablecoin crime.”
A Twitter user further asserted that First Digital is “really testing SFC’s limits here. These guys, carrying a Trust License in Hong Kong, think they can bypass SFC for being governed by the Trust Ordinance instead of securities regulations?” Adam Cochran agreed and stated, “Yup and I’m not sure how they plan to monetize as an HK Trust must keep full reserves and shouldn’t invest those assets.”
Renowned crypto figure and CryptoQuant CEO Ki Young Ju also got into the conversation and demanded a proof from Cochran as he could find any link between Justin Sun and First Digital Trust on the Internet. Cochran shared the screenshot below and answered that the source of them using First Digital was their own website and auditor statements before they stopped showing the breakdown.” Ju reacted with: “That’s crystal clear. Thanks, Adam!” Remarkably, neither Justin Sun nor Binance have made any statements regarding the claims made by Cochran.
When announced, First Digital said that FDUSD is backed by “high-quality reserves” of cash and cash equivalents in regulated financial institutions around Asia, and will be issued by First Digital Trust, registered under Hong Kong’s Trust Ordinance. Under this law, the trust has to keep all reserves in segregated accounts to prevent commingling of assets.
As Bitcoinist Justin Sun Faces New Allegation: Are 60,000 Bitcoin On Tron Unbacked?, Cochran also investigated that Justin Sun is behind TrueUSD (TUSD) and the Seychelles-based cryptocurrency exchange Huobi. In his most recent allegations, Cochran claimed that 60,000 bitcoin (BTC) are unbacked on the Tron blockchain. A portion of that was allegedly turned into stablecoins by Sun to buy Huobi.
At press time, the Tron (TRX) price stood at $0.0871, up 10% in the last 30 days.
Featured image from South China Morning Post, chart from TradingView.com
