Is Justin Sun Taking A Page From Binance's Playbook? How FDUSD Attack Mirrors Binance-FTX Feud

• Tron founder Justin Sun has launched an attack against First Digital Trust.
• Sun’s tactics in the ongoing spat mirror elements of the feud between Binance and FTX.
• At the center of the dispute is a $456 million misappropriation claim.

While FTX may have well been on its way to its demise, many believe the death blow was Binance founder Changpeng “CZ” Zhao’s public vote of no confidence on the rival exchange. He publicly outlined plans to sell off FTX’s native token over concerns about its health, triggering a fatal run on the now-defunct platform.

Now, Binance, or at least a firm with close ties to it, may be on the receiving end of a similar attack.

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Justin Sun Running Binance’s Playbook?

Throughout Wednesday and Thursday, Tron founder Justin Sun shouted to anyone who would listen that First Digital Trust was insolvent. First Digital Trust is the Hong Kong-based entity behind FDUSD, Binance’s stablecoin of choice.

“First Digital Trust (FDT) is effectively insolvent and unable to fulfill client fund redemptions. I strongly recommend that users take immediate action to secure their assets,” Sun asserted in his first missive on Wednesday.

Despite Sun’s failure to provide evidence, his claims were enough to trigger a rush of redemptions that saw FDUSD briefly lose its peg and trade as low as $0.87 in a debacle that takes the mind back to the beef between Binance and FTX.

“Remember when CZ publicly accused FTX of insolvency and triggered a bank run on the exchange?” One crypto community member wrote, adding, “Justin is trying to run the same playbook Insanely malicious especially if this accusation turns out to be false. The emperor has no clothes.”

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Unlike the FTX saga, First Digital Trust appears to be holding steady. For now, the market appears to have been appeased by data showing the firm processing redemptions and an attestation of its reserves.

Sun’s attack against First Digital Trust appears linked to a recent legal filing in Hong Kong by Techteryx, the issuer of the TrueUSD stablecoin, against First Digital Trust. This filing was first reported by CoinDesk.

In the legal filing, Techteryx accuses First Digital Trust, which it had appointed as a fiduciary to manage its reserve, of misappropriating $456 million of its funds and failing to pay up when it needed it. Techteryx claims this situation forced it to obtain a bailout from Sun.

Techteryx has long been rumored to be owned by Sun, a claim both parties vehemently deny. 

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A Classic Case of Deflection?

First Digital Trust has denied the claims alleged in the legal filing while labeling the filing and Sun’s actions as an attempt to deflect from Techteryx’s failings.

According to a statement by First Digital Trust, it never moved or invested any of Techteryx’s funds without the latter’s express permission. The firm contended that it was the TUSD issuer’s decision to make illiquid investments. It also contended that redemption of these funds hinged on AML/KYC concerns over Techteryx’s beneficial owner, which it said the firm has refused to reveal to date.

“We reiterate that FDT remains fully solvent, and every FDUSD is securely backed 1:1 by cash and cash equivalents. The exact ISIN numbers of all reserves backing FDUSD are clearly outlined in our attestation report, which is publicly available for verification. We are processing redemption requests as usual. We are seeking legal advice and FDT will pursue legal action to protect it’s [sic] rights and reputation,” First Digital Trust said.

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