HTX (formerly known as Huobi), one of the leading cryptocurrency exchanges, has been embroiled in a new controversy as Justin Sun, Tron\u2019s founder and BitTorrent\u2019s CEO, faces allegations of a staggering $2.4 billion shortfall in user funds.\u00a0<\/p>\n
Adam Cochran, Managing Partner at Cinneamhain Ventures, has shed light on the intricate details of the alleged malpractice, revealing <\/a>a web of \u201cfinancial manipulations.\u201d<\/p>\n Cochran\u2019s analysis raises concerns over Huobi\u2019s financial stability, questioning the integrity of the exchange\u2019s claims regarding its holdings of Ethereum (ETH) and USDT, a stablecoin pegged to the US dollar.\u00a0<\/p>\n As seen in the chart above, while Huobi asserts assets worth $200 million in ETH, Cochran\u2019s investigation, corroborated by defillama data, reveals a discrepancy, with the actual value amounting to under $113 million, even when considering wrapped ETH (WETH) and staked ETH (stETH).<\/p>\n The situation further unravels when examining Huobi\u2019s purported $624 million USDT holdings. However, Cochran\u2019s findings indicate that only $119 million of USDT resides within the exchange, while the remaining balance is in staked USDT (stUSDT).\u00a0<\/p>\n What raises suspicion is that Justin Sun has enabled staked USDT (stUSDT) a staking feature, which allows users to stake either USDT or TUSD (TrueUSD) to earn stUSDT, as reported <\/a>by NewsBTC.\u00a0<\/p>\n Instead of following the expected protocol of burning staked assets to claim the cash and take it offline, these funds are redirected to Justin Sun\u2019s addresses or utilized to support JustLend, a lending platform associated with the Huobi ecosystem.<\/p>\n Contrary to Huobi\u2019s claim that it burns the stUSDT with Tether, Cochran\u2019s investigation reveals that the counterparties for USDT on Huobi are the exchange\u2019s deposit wallets or Binance.\u00a0<\/p>\n This suggests that Justin Sun may utilize USDT from user balances on Huobi to generate stUSDT, subsequently leveraging the underlying USDT to support JustLend or repurchase TUSD on Binance.<\/p>\n Cochran concludes that this complex financial arrangement, including TUSD deposits into stUSDT, effectively mints \u201cfake assets\u201d against an unknown equity.\u00a0<\/p>\n As a result, Cochran estimates that Justin Sun\u2019s alleged debt to users across the Huobi and Tron ecosystems amounts to approximately $2.4 billion, all while users remain unaware of the situation.<\/p>\n Huobi has not yet formally responded to these allegations, leaving the situation\u2019s outcome uncertain. However, the possibility of Huobi\u2019s insolvency raises significant concerns regarding the security of user funds and the overall trustworthiness of the exchange.<\/p>\n It remains to be seen how this situation will develop and what actions will be taken to address these concerns effectively.<\/p>\n Featured image from Shutterstock, chart from TradingView.com <\/p>","protected":false},"excerpt":{"rendered":" <\/p>\n HTX (formerly known as Huobi), one of the leading cryptocurrency exchanges, has been embroiled in a new controversy as Justin Sun, Tron\u2019s founder and BitTorrent\u2019s CEO, faces allegations of a staggering $2.4 billion shortfall in user funds.\u00a0<\/p>\n Adam Cochran, Managing Partner at Cinneamhain Ventures, has shed light on the intricate details of the alleged malpractice, revealing <\/a>a web of \u201cfinancial manipulations.\u201d<\/p>\n Cochran\u2019s analysis raises concerns over Huobi\u2019s financial stability, questioning the integrity of the exchange\u2019s claims regarding its holdings of Ethereum (ETH) and USDT, a stablecoin pegged to the US dollar.\u00a0<\/p>\n As seen in the chart above, while Huobi asserts assets worth $200 million in ETH, Cochran\u2019s investigation, corroborated by defillama data, reveals a discrepancy, with the actual value amounting to under $113 million, even when considering wrapped ETH (WETH) and staked ETH (stETH).<\/p>\n The situation further unravels when examining Huobi\u2019s purported $624 million USDT holdings. However, Cochran\u2019s findings indicate that only $119 million of USDT resides within the exchange, while the remaining balance is in staked USDT (stUSDT).\u00a0<\/p>\nHuobi Crisis Unveiled?<\/h2>\n
Allegations Mount Against Justin Sun\u00a0<\/h2>\n
Huobi Crisis Unveiled?<\/h2>\n