- Allegations are surfacing that Huobi may be insolvent due to Justin Sun’s behavior.
- USDT gets caught in the crossfire, Huobi representative denies claims.
Despite the massive volatility in the DeFi sector over the past few weeks, the stablecoin sector has remained relatively resilient. USDT, the largest tether issued stablecoin, was one of the top performers in the industry. As a result, the USDT dominance of the total stablecoin market cap reached its highest point in more than 2 years.
Realistic or not, here is TRX’s market cap in terms of BTC
Something fishy
However, there has been a USDT sell-off in recent days, which could affect the stablecoin. According to Adam Cochran, managing partner at Cinnamhain Ventures and a contributor to Yearn Finance, Justin Sun may have something to do with the sell-off.
Source: DeFi Lama
In his tweet, Adam suggested that the trail of the USDT sell-off starts with Binance. He stated that based on past behavior with the exchange’s previous sale of the FTT token, it is safe to assume that Binance will get wind of risky assets ahead of time.
1/16
So why is Tether selling?
Probably Huobi insolvency.
-Binance started selling USDT en masse.
-We found out that Huobi execs (and Tron personnel questioned by police)
-This is not long after Sun’s stUSDT launch
-And weird balance shifts at Huobi in the last month pic.twitter.com/f3HViYS93a— Adam Cochran (adamscochran.eth) (@adamscochran) August 5, 2023
Over the past few days, Binance was observed bulk unloading large amounts of USDT. This was weeks after the drop in USDT on Huobi.
Source: DeFi Lama
stUSDT plays a major role
He then went on to explain how he believed Tron and Justin Sun played a part in this. He started by talking about stUSDT, a staked USDT product launched by Tron.
Adam’s research into Tron’s stUSDT revealed a stark contrast between claimed strikers and the actual distribution of the token. Tron’s website claimed it had 351,380 strikers, but their blockchain data revealed that nearly 98% of stUSDT was directly owned by Sun or Huobi. When wagering USDT on stUSDT, the funds were pooled in a Huobi deposit address.
In addition, Huobi’s Merkle Tree Audit purportedly lists $630 million USDT held by users, though this data stopped being updated last month, leading to a discrepancy, with only $90 million substantiated. Justin Sun appears to be channeling remaining assets into his defi projects while enticing users to deposit more into Huobi through yield incentives.
Based on Adam’s speculations, users believe that they have a balance of $631 million on Huobi, but the amount is actually $90 million. Adam further stated that many Huobi and Tron employees are currently under investigation.
Read Tron’s price forecast for 2023-2024
However, a spokesperson for Huobi refuted that claim, stating that none of their employees are being investigated by the police, and that the thread Adam made only created more FUD and is just a false rumor.
He replied to this comment by stating that the information was confirmed by senior executives working at Tron.
This was already directly confirmed to me by a senior executive of the Tron team.
They confirmed that team members are under investigation for actions related to Huobi.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 6, 2023
It remains to be seen how this turns out. The course of these events may affect not only Tron users, but also USDT and Huobi users.
State of the coins
At the time of writing, TRX was trading at $0.077, while the Huobi Token (HT) was trading at $2.66. The price of these tokens has dropped significantly in recent weeks. However, no major price change has been seen for any of these tokens in the past 24 hours as their prices have remained stable.
USDT’s market cap also remained consistent and no major change was observed for the stablecoin in this sector either.
Source: Sentiment
Trader behavior indicated that many of the traders were leaning towards the bearish side. According to Coinglass data, the number of short positions taken against TRX had increased in recent days.
Source: mint glass