Key Takeaways:
- Justin Sun says calling Huobi Insolvent only intensifies the FUD.
- Meanwhile, the exchange faces a USDT outflow crisis.
- Sun accused of using Huobi and Tron for personal gains.
YEREVAN (CoinChapter.com) – Justin Sun, the founder of the Tron blockchain, responded to Huobi exchange’s insolvency rumors, urging his audience to “ignore the FUD and keep building.”
However, his calls for trusting the vision ring hollow as accusations of personal involvement in the USDT outflow build.
What happened with USDT on Huobi — Is Huobi exchange insolvent?
Adam Cochran, a fintech executive and an angel investor, tweeted about the abnormal Tether (USDT) outflows from the Huobi exchange on Aug 6, after Huobi launched its Staked USDT (stUSDT) product. He reported that Binance had commenced the bulk sale of USDT on top of the “weird balance shifts at Huobi in the last month.”
Just like with FTT, Binance is often the first to know about risky assets or issues within the industry due to its scales and connections. And if we look at the time stamps of Friday’s rapid sell off of USDT, it’s after the time Huobi employees would have been questioned.
asserted the expert in a lengthy thread.
Moreover, Cochran asserted that the police are questioning Tron and Huobi employees. However, the Community Manager at the exchange denied the questioning, calling claims of Huobi exchange insolvency pure rumors.
Is Huobi Justin Sun’s personal purse?
Meanwhile, the numbers at Huobi don’t add up. Tron’s website shows over 350,000 stakers of USDT (stUSDT holders) on the chain. However, Cochran claims that 98% of the token is held by “Sun or Huobi directly.
“When you “stake” USDT into stUSDT, it gets swept into a Huobi deposit address,” asserted the executive.
Moreover, Tron does not hold enough USDT to back the stakers. According to Cochran, the exchange holds only $90 million in USDT and USDC combined.
Huobi’s own ‘Merkle Tree Audit’ still lists that Huobi users have $630M of USDT held and a wallet balance of $631M USDT—users think they have balances of $631M in Huobi, but there is only $90M there.
he said.
The missing funds, Cochrane alleged, are being used to prop up the yields of Tron, Poloniex, and other DeFi apps operated by Sun.
While the controversy is far from over, the amount of stablecoins on Tron continues to decline.
