Binance-linked Alphanest poised for one-quarter stake in First Digital

Early last month the company behind the FDUSD stablecoin, First Digital Trust, said it had signed a business combination agreement that will take it public, with the transaction expected to close next year.

Word of the deal follows the collapse in market capitalization of its flagship product, FDUSD, which has shed more than $4 billion since peaking in April 2024.

Binance stands to gain from the listing, since a Binance-related entity, Alphanest Holdings, is a major warrant holder in the company.

Alphanest is owned today by Binance Holdings (IE) Limited; before that it belonged to Binance founder Changpeng Zhao, who was released from prison not long ago.

If the warrant is exercised, that Binance entity would end up with roughly one-quarter of the equity in the company once the merger is done.

With the merger in prospect and both First Digital and Binance under strain of late, Protos examined in detail the finances and other information disclosed so far.

Revenue declines, losses widen

FDUSD’s shrinking market value is only one of the financial headaches facing First Digital Trust, whose revenue is also dropping sharply. Under the merger the firm carries a pre-money valuation of $250 million.

The investor presentation it has released reports $87 million in revenue for fiscal year 2025, which it concluded on June 30, 2025, against merely $27 million in unaudited 2026 revenue, which presumably also ended in June.

Worse still, 2025 delivered net revenue of $6 million — $10 million better than the net revenue loss of $4 million posted for 2026.

Its adjusted operating loss widened as well, from $17 million to $19 million.

The firm notes that “FDUSD revenue is driven by reserves in cash and equivalents,” and because the stablecoin’s market capitalization has been falling, the returns earned on those reserves would be expected to move the same way.

A further drop of approximately $50 million in FDUSD’s supply since June 30 compounds the problem.

Its holdings are also heavily concentrated in wallets labeled Binance: some 90% of the FDUSD on Ethereum sits in such addresses, worth approximately $170 million, and the same pattern repeats across chains.

On Sui, a single Binance-labeled wallet holds approximately $43 million of FDUSD.

By Protos’s reckoning, approximately 80% of all FDUSD is held in Binance wallets.

Battle with Justin Sun

Among the material legal proceedings First Digital Trust lists on its investor relations page is its defamation lawsuit against Justin Sun.

That suit answers allegations Sun has made about the company.

Sun and Techteryx — a firm connected to TrueUSD — had sued First Digital Trust earlier, alleging that First Digital misappropriated the reserves backing TrueUSD.

The legal battles of Justin Sun

Sun went beyond the claims made in that case, taking to X to air his assertion that “It’s evidently the case that First Digital Trust(FDT) is unable to fulfill client fund redemptions and effectively insolvent.”

First Digital initially answered with a post on X saying that “every FDUSD is securely backed 1:1 by cash and cash equivalents” and that the firm “remains fully solvent.”

It then filed its suit against Sun.

It’s evidently the case that First Digital Trust(FDT) is unable to fulfill client fund redemptions and effectively insolvent. However, it continues to operate under the cover of a public trust in Hong Kong despite the major irregularities. There seem to be obvious loopholes in…

— H.E. Justin Sun (@justinsuntron) April 2, 2025

First Digital also settled recently with Archblock and TrueCoin, two of the companies that formerly operated TrueUSD, inside the Archblock bankruptcy.

In that bankruptcy case, Techteryx has filed for a Chapter 11 trustee to be appointed.

It accuses Archblock of “ultimately defrauding Techteryx for the benefit of a corrupt set of foreign purported investment entities, which in turn paid lucrative commissions to the fraud’s participants.”

Techteryx is gesturing at its allegations that Legacy Trust — a forerunner of sorts to First Digital — and First Digital misappropriated TrueUSD reserves by steering them into the Aria Fund.

Binance, hacked recently for several billion dollars worth of value, could soon hold a major shareholder position in a stablecoin issuer that trades publicly.