- Claims come to the surface that Huobi may be insolvent due to Justin Sun’s behavior.
- USDT gets stuck in the crossfire, Huobi representative denies claims.
Despite the massive volatility in the DeFi sector over the past few weeks, the stablecoin sector has been relatively resilient. USDT, tether’s largest issued stablecoin, was one of the top performers in the sector. Due to this, the USDT dominance of the total stablecoin market cap hit its highest point in over 2 years.
Realistic or not, here’s TRX’s market cap in BTC’s terms
Something fishy
However, over the last few days, there was a USDT sell-off that occurred, which could impact the stablecoin. According to Adam Cochran, who is a managing partner at Cinneamhain Ventures and a contributor to yearn finance, Justin Sun may have something to do with the sell-offs.
Source: DeFi Llama
In his tweet, Adam suggested that the trail of the USDT sell-offs starts with Binance. He stated that based on past behavior with the exchange’s past selling of the FTT token, it is safe to assume that Binance gets wind of risky assets ahead of time.
1/16
So why is Tether selling off?
Likely Huobi insolvency.
-Binance started selling off USDT in bulk.
-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 last few days, it was observed that Binance was offloading large amounts of USDT in bulk. This was weeks after the decline of USDT on Huobi.
Source:DeFi Llama
stUSDT plays a big role
He then went on to explain how he believed Tron and Justin Sun had a role to play in this. He started out by talking about stUSDT, a staked USDT product launched by Tron.
Adam’s investigation into Tron’s stUSDT revealed a stark contrast between claimed stakers and the token’s actual distribution. Tron’s website asserted that it had 351,380 stakers, but their blockchain data exposed that nearly 98% of stUSDT was directly held by Sun or Huobi. When staking USDT to stUSDT, the funds merged into a Huobi deposit address.
Moreover, Huobi’s Merkle Tree Audit ostensibly lists $630M USDT held by users, though this data ceased updating last month, leading to a discrepancy, with only $90 million substantiated. Justin Sun appears to channel the remaining assets into his defi projects while luring users to deposit more on Huobi through yield incentives.
Based on Adam’s speculation, users believe that they have balances of $631 million on Huobi, however, in reality, the amount is actually $90 million. Adam also went on to state that many of Huobi and Tron’s employees were currently under investigation.
Read Tron’s Price Prediction 2023-2024
However, a spokesperson from Huobi refuted that claim, stating that none of their employees are being investigated by the police, and the thread that Adam made was just creating more FUD and is just a false rumor.
He replied to this comment by stating that the information was confirmed by senior-level executives working at Tron.
This was already confirmed to me directly, by a senior executive from the Tron team.
They confirmed team members were under investigation due to actions related to Huobi.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 6, 2023
It remains to be seen how this plays out. The unfolding of these events may not only have an impact on Tron but also USDT and Huobi users.
State of the tokens
At press time, TRX was trading at $0.077, whereas the Huobi Token (HT) was trading at $2.66. The price of these tokens declined materially over the last few weeks. However, in the last 24 hours, there wasn’t a major change in price observed for either of these tokens as their prices remained stable.
USDT’s market cap remained consistent as well, and there was no massive change observed for the stablecoin in this sector as well.
Source: Santiment
Trader behavior indicated that many of the traders were leaning toward the bearish side. According to Coinglass’ data, the number of short positions taken against TRX had increased over the last few days.
Source: coinglass
