Justin Sun Caught in Dual Stablecoin Storm: TUSD Liquidity Crisis and FDUSD Depeg

Fraud Allegations, Insolvency Claims, and a Market Rattled by Broken Trust

TrueUSD (TUSD), once marketed as a fully-backed stablecoin, is now at the center of a mounting crisis that has unraveled its internal operations and exposed deep structural flaws across its custodial and investment channels. Between March and April 2025, more than $456 million in TUSD reserves were discovered to be tied up in unauthorized and illiquid investments. The revelation has raised serious questions about fiduciary trust, reserve integrity, and the broader implications for stablecoin markets.

Techteryx, the company that acquired TUSD in late 2020, traced the shortfall to First Digital Trust (FDT), the fiduciary tasked with safeguarding the reserves. Rather than holding the funds in liquid assets as intended, FDT redirected the capital into Aria Commodities DMCC, a Dubai-based trade infrastructure firm. These funds were originally earmarked for the Aria Commodity Finance Fund (Aria CFF), a Cayman Islands vehicle. The move effectively severed the liquidity lifeline TUSD relied on to support redemptions, locking funds in manufacturing plants, mining sites, and port infrastructure.

The tangled investment trail points to Matthew Brittain as the orchestrator behind Aria CFF through his entity Aria Capital Management Ltd., while Cecilia Brittain is named as the sole shareholder of Aria Commodities DMCC. Despite their separate legal status, court documents describe the entities as “deeply intertwined.” Techteryx has filed legal action, accusing the parties involved of financial mismanagement, embezzlement, fraud, and misrepresentation. Allegations include unauthorized loans issued under the guise of trade finance deals that were misrepresented on FDT’s balance sheets.

As TUSD’s liquidity deteriorated further by mid-2023, Tron founder Justin Sun stepped in with emergency capital to prevent a full-scale collapse. Sun’s intervention helped Techteryx quarantine $400 million of compromised reserves, giving users temporary redemption confidence and halting a potential bank run. According to Sun, his decision was driven by a need to preserve trust in stablecoins, stating, “I stepped in to help stabilize TUSD because I believe in the importance of maintaining trust in stablecoins and ensuring the security of their reserves.”

The situation escalated further on April 2, when Justin Sun took to X to publicly accuse First Digital Trust of being “effectively insolvent.” He urged users to withdraw their assets and called on Hong Kong regulators to step in, warning that the city’s credibility as a global financial hub was at stake. 

The timing of his warning had immediate market consequences. FDUSD, a separate stablecoin issued by FDT, fell to $0.8726, erasing roughly $130 million in market capitalization before partially recovering to $0.98. 

The sell-off underscored FDUSD’s exposure on Binance, where 94% of its $2.2 billion supply is held—$1.5 billion in user deposits and another $700 million in corporate funds. The volatility was further amplified by FDUSD/BTC, one of Binance’s most traded pairs.

FDT quickly moved to deny Sun’s insolvency claims. A spokesperson asserted that FDUSD remains fully backed 1:1 by U.S. Treasury Bills, with all reserve ISIN numbers published in their attestation reports. The firm called Sun’s public accusations a “coordinated smear campaign” aimed at damaging a competitor’s reputation and confirmed plans to pursue legal action. To address public concerns, FDT hosted a live AMA session on April 3 at 4 PM (Hong Kong time), attempting to reassure users of the stablecoin’s solvency and operational transparency.

This isn’t the first time TUSD has faced serious setbacks. In previous years, its custodian partner Prime Trust fell into receivership under allegations of embezzlement. Meanwhile, the SEC had reached a cease-and-desist settlement with former TUSD operators—TrueCoin and TrustToken—over false claims regarding full dollar backing and investments in unregulated offshore funds. 

On April 3, FDUSD quickly rebounded, regaining its peg within 24 hours to trade above $0.99, but not before algorithmic trading firm Wintermute moved in to capitalize on the disruption. Seizing what appeared to be a significant arbitrage opportunity, Wintermute acquired over 31 million FDUSD from Binance at prices likely near the $0.90 mark. 

The firm then redeemed over 75 million tokens directly with FDT, likely netting over $3 million by exploiting the discrepancy between market price and redemption value. The maneuver required FDT to burn 87 million tokens, the majority originating from Wintermute, while another $53 million FDUSD was transferred to a separate wallet—$40 million swapped into USDT and $13 million sent back to Binance.

FDUSD functions as a crucial pillar of Binance liquidity, integrated into top pairs such as BTC, USDT, BNB, SOL, DOGE, and XRP. Its role extends into token sale events and launch pools, amplifying the impact of any disruption. Despite the volatility, Binance’s proof-of-reserves data confirmed a reserve ratio of 111.07% for FDUSD—signaling holdings that exceed total user liabilities and helping restore market trust. The rapid and orderly redemptions played a key role in re-establishing confidence among investors.

Hong Kong authorities took notice. Legislator Johnny Ng issued a statement promising a regulatory review if Justin Sun’s claims of fraud are substantiated. Ng defended the city’s legal infrastructure for Web3 development and international investment, urging calm while simultaneously acknowledging that his office had received multiple complaints involving Hong Kong-based trust companies. He suggested tightening oversight frameworks to close loopholes and deter bad actors from exploiting regulatory gray zones.

Even as FDUSD stabilizes near its $1 peg, questions remain. S&P Global Ratings previously assigned FDUSD a stability score of 4 on a scale from 2 (strong) to 5 (weak), citing concerns around governance, regulatory supervision, liquidity, and redemption mechanisms. The rating reflected broader structural fragilities that became visible during the depegging event, raising red flags for both retail users and institutions dependent on the token’s reliability.

Despite a relatively small circulating supply of 2.5 billion, FDUSD wields outsized influence across crypto markets, consistently recording daily volumes exceeding $7.78 billion—particularly on Binance. It is actively deployed on DeFi platforms such as Kamino Finance, Raydium, and PancakeSwap, and held across more than 39,000 wallets. The brief depeg even triggered pricing anomalies, with the BTC/FDUSD pair temporarily spiking to $99,000 as traders reacted to distorted valuations.

This article has been refined and enhanced by ChatGPT.