- Claims are surfacing that Huobi may be insolvent due to Justin Sun’s behavior.
- USDT is caught in the crossfire, Huobi representative denies.
Despite massive volatility in the DeFi sector over the past few weeks, the stablecoin sector has been relatively resilient. USDT, the largest stablecoin issued by Tether, was one of the best performers in the industry. Because of this, USDT’s dominance over the total stablecoin market cap has reached its highest point in more than 2 years.
Realistic or not, here is the market capitalization of TRX in terms of BTC
However, in the past few days, a USDT selloff has occurred, which may impact the stablecoin. According to Adam Cochran, who is a managing partner at Cinneamhain Ventures and a finance contributor, Justin Sun might have something to do with sales.
In his tweet, Adam suggested that the USDT sell trail start with Binance. He said that based on past behavior with the exchange’s past selling of the FTT token, it’s safe to assume that Binance has wind of risky assets ahead of time.
So why is Tether selling out?
Probable insolvency of Huobi.
-Binance has started wholesale USDT.
-We found out that Huobi executives (and Tron staff interviewed by police)
-It’s not long after the launch of Sun’s stUSDT
-And strange balance changes at Huobi over the past month pic.twitter.com/f3HViYS93a
— Adam Cochran (adamscochran.eth) (@adamscochran) August 5, 2023
Over the past few days, Binance has been observed to offload large amounts of USDT in bulk. This was weeks after the USDT decline on Huobi.
stUSDT plays a big role
He then explained how he thought Tron and Justin Sun had a role to play in this. He started by talking about stUSDT, a staked USDT product launched by Tron.
Adam’s investigation of Tron’s stUSDT revealed a stark contrast between the claimed stakers and the actual distribution of the token. Tron’s website claimed it had 351,380 stakers, but their blockchain data revealed that nearly 98% of stUSDT was directly owned by Sun or Huobi. When staking USDT on stUSDT, the funds merged into a Huobi deposit address.
Additionally, Huobi’s Merkle Tree Audit apparently lists $630 million USDT held by users, although this data ceased updating last month, leading to a discrepancy, with only $90 million substantiated. . Justin Sun appears to be funneling remaining assets into his challenge projects while enticing users to deposit more on Huobi through performance incentives.
Based on Adam’s speculation, users think they have balances of $631 million on Huobi, but in reality, the amount is actually $90 million. Adam also said that many Huobi and Tron employees are currently under investigation.
Read Tron Price Prediction 2023-2024
However, a spokesperson for Huobi refuted this claim, stating that none of their employees are under investigation by the police, and that the thread Adam created only created more FUD and is just a false rumor.
He responded to this comment by stating that the information had been confirmed by senior executives working at Tron.
This has already been confirmed to me directly, by a senior staff member of the Tron team.
They confirmed that the 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 impact Tron but also USDT and Huobi users.
At press time, TRX was trading at $0.077, while the Huobi (HT) token was trading at $2.66. The price of these tokens has dropped significantly over the past few weeks. However, in the past 24 hours, no major price changes have been seen for either of these tokens as their prices have remained stable.
The market capitalization of USDT also remained constant, and no massive changes were seen for the stablecoin in this sector as well.
Trader behavior indicated that many traders were leaning to the bearish side. According to data from Coinglass, the number of short positions taken against TRX had increased over the past few days.