- After FDUSD’s price drop, Wintermute profited up to $3 million as the stablecoin recovered.
- First Digital Insists FDUSD is backed and redeemable, denying loss of control through insolvency claims.
- FDUSD’s depeg has yet to be resolved and continues to undermine investor confidence in the entire market.
A prominent player in cryptocurrency, Wintermute, has recently executed transactions that suggest a smart trading opportunity after the unexpected fall of the FDUSD stablecoin. Justin Sun, founder of Tron, revealed that the firm behind the stablecoin was insolvent, with the funds to support the coin not available.
Thus, FDUSD, which was supposed to be worth $1, went down to $0.87 on April 2. Wintermute saw this price drop, and acted quite quickly.
FDUSD Depeg and Wintermute’s Role
Within a day, they sent back a substantial 75 million FDUSD tokens to First Digital, the stablecoin issuer. Blockchain data also revealed that at the time, they bought over 31 million FDUSD tokens from Binance, one of the largest cryptocurrency exchanges.
Since the February $2.24 billion sell-off by major market players like Wintermute, which caused mayhem in the crypto markets, the company’s actions have come under scrutiny. However, Evgeny Gaevoy, Witnermute’s founder, claimed that their recent crypto downturns were caused by Donald Trump’s new trade tariffs.
First Digital Rejects Sun’s Claims
Justin Sun has made accusations of financial problems at First Digital, which have been dismissed by the company. Their reassuring message to the coin holders was that the currency was fully backed and is still exchangeable at a 1:1 ratio for US dollars.
They have denied Sun’s claims as false and stated that it was his own company, Techteryx, that was in trouble. However, some financial analysts have pointed out that this stablecoin could not remain stable over time.
The stablecoin’s stability has recently been rated as ‘constrained’ by S&P Global Ratings, so there are at least some risks associated with maintaining its value. In response to the controversy, First Digital said that it would take legal action against Justin Sun for defaming it by spreading false insolvency claims, which it believes directly resulted in the drop of the stablecoin’s value.