The stablecoin First Digital USD (FDUSD) experienced a short-term depeg from its intended $1 valuation on April 2, 2025, following public insolvency allegations leveled by Tron founder Justin Sun against the stablecoin issuer First Digital. Although vehemently denied by First Digital, the resulting market volatility created a highly lucrative arbitrage opportunity, reportedly netting prominent market maker Wintermute an over-$3 million profit.
The value of FDUSD briefly dipped to approximately $0.87, according to on-chain data reviewed by blockchain intelligence platform Lookonchain. This led Wintermute, a well-known figure in the digital asset market-making industry, to act quickly. Wintermute transferred over 75 million FDUSD tokens to First Digital Labs in a matter of minutes following the depeg, Lookonchain said.
The likely strategy adopted by Wintermute was to purchase FDUSD at a discounted price during the depeg event and redeem the tokens afterwards at their face value of $1 through First Digital. If Wintermute purchased FDUSD near its low price of $0.90, as suggested by Lookonchain, the redemption later would have had a profit of more than $3 million.
The depeg was seemingly caused by remarks by Justin Sun that First Digital, Hong Kong custodian organization in charge of FDUSD, was insolvent. These allegations instigated some market panic, and therefore a loss of confidence in the stablecoin peg temporarily.
On charges, First Digital made a strong denial in the face of FDUSD's solvency and unshakeable support of FDUSD. The company stood firm in its statement dated April 3 that FDUSD continues to be traded on a 1:1 basis against the dollar and repudiated Sun's charges as "unfounded," upholding again the strength and integrity of its capital base.
Even as First Digital guaranteed otherwise, the incident illustrates the dormant risk of stablecoins and latent market volatility due to extrinsic factors like social narrative on social media and talks by notable speakers.
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