Binance’s FDUSD stablecoin regains its dollar peg after flash crash

Binance’s FDUSD crashed as low as $0.95, causing limited market panic and inviting traders to make use of the loss. FDUSD has been a key source of liquidity for several of Binance’s trading pairs. 

FDUSD, a stablecoin specifically issued for trading pairs on Binance, is back above $0.99, almost regaining its $1 peg. The token, which has so far remained reliable, had a de-pegging event, sinking as low as $0.87. 

The immediate reason for the de-peg is a statement by TRON’s founder, Justin Sun. He claimed the stablecoin issuer, First Digital Trust, was insolvent and incapable of honoring FDUSD redemptions. This led to market panic and the immediate chaotic dip of the stablecoin. 

First Digital Trust debunked those claims, but not before seeing FDUSD suffer the effect of the market panic. In a social media statement, First Digital Trust claimed all issued stablecoins are backed by traceable T-bills and other assets. The company also stated it would seek legal action against Sun for the smear campaign. 

The recent allegations by Justin Sun against First Digital Trust are completely false.

This dispute is with TUSD and not with $FDUSD. First Digital is completely solvent.

Every dollar backing $FDUSD is completely, secure, safe and accounted for with US backed T-Bills. The…

— First Digital (@FirstDigitalHQ) April 2, 2025

The probable reason for Sun’s attack is that FDT was at one point responsible for the backing of TrueUSD (TUSD). The asset turned insolvent, requiring Sun to bail it out with $450M of his own funds. Sun’s involvement with TUSD was documented by a Hong Kong court, which is now investigating the stablecoin’s backing. 

FDT has been accused of not providing sufficient oversight of TUSD’s reserves. FDT was supposed to be in charge of the stablecoin’s treasury after Techteryx acquired the stablecoin project from its founder, TrueCoin.

However, there is currently no direct evidence that FDUSD is facing a similar situation or that its reserves are limited. Binance itself carries FDUSD reserves in excess of user claims, with a 111.07% ratio.

FDUSD is mostly tied to Binance’s demand

Demand for FDUSD issuance mostly comes from Binance, which is often the sole recipient of new mints and redemptions. 

The supply of FDUSD peaked in April 2024, just before the spring and summer Bitcoin (BTC) rally. FDUSD was mostly deployed to a leading BTC pair, making up over 34% of the token’s volume. The other big market is the swapping pair FDUSD/USDT, which allows traders to move between stablecoins. FDUSD is mostly available to international clients, as it has been removed as an option for EU-based traders. FDUSD also offers additional perks and programs on Binance for its holders. 

FDUSD is also used as liquidity for multiple leading coins and tokens, including BNB, SOL, DOGE, and XRP. FDUSD is also one of the eligible assets for participation in launch pools and other limited token sale events. Recently, Binance started phasing out FDUSD from launch pools, offering alternative stablecoins for participation.

While the token has received criticism for being too centralized, it has so far worked well for its role on Binance. In the past, BTC and other market rallies have been tied to increased issuance of FDUSD. 

The token has a circulating supply of just 2.5B, though its daily trading volume is over $7.78B. Despite its limited supply, FDUSD is extremely influential due to its representation on Binance and is a key source of liquidity during market rallies. 

Wintermute moves in to buy FDUSD

The leading market maker, Wintermute, moved in with a new purchase as FDUSD de-pegged. The known Wintermute wallets hold over 38M FDUSD after the latest withdrawal of over 31M tokens from Binance. 

Based on the market maker’s purchase at around $0.90, Wintermute possibly made up to $3M in earnings after FDUSD recovered. Additionally, the traders on the BTC/FDUSD pair saw the price climb to $99,000 based on stablecoin valuations, opening a brief opportunity to lock in higher gains, but only if FDUSD moved closer to its $1 peg. 

This makes Wintermute one of the leading holders, with wallets almost competing with some of Binance’s vaults. 

FDUSD is mostly used on the centralized market but has spread to DeFi protocols. Some of the supply has flowed into Kamino Finance, and some of the stablecoins are flowing into Raydium. The stablecoin is also used on the PancakeSwap DEX, one of the main BSC markets. The stablecoin is held in a little over 39K wallets and has not caused mass panic with more long-lasting trading under $1.  

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