Shockingly, Justin Sun, founder of the Tron Blockchain and majority shareholder of cryptocurrency exchange HTX Global (formerly Huobi), is facing bankruptcy allegations that could have potentially far-reaching implications for the crypto industry. Cinneamhain Ventures Managing Partner Adam Cochran recently made some surprising claims on Twitter regarding Huobi’s finances and Justin Sun’s role in its potential bankruptcy. Here are the details…
There are bankruptcy claims for the cryptocurrency exchange
Cochran’s Twitter thread, which sent shockwaves through the cryptocurrency community, suggests that Justin Sun may owe a staggering $2.4 billion to customers, and there are doubts about whether he has the reserves to cover those customer deposits. The situation looks even more dangerous considering the recent actions of Sun and cryptocurrency startups.
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The rest is held in “stUSDT” again, and people don’t realize that Justin enabled a feature where you can now stake *either* USDT or TUSD into stUSDT staking: pic.twitter.com/zwSGmURjIx
— Adam Cochran (adamscochran.eth) (@adamscochran) September 25, 2023
In a series of tweets, Cochran outlined his concerns about the discrepancies between Justin Sun’s claims and the actual status of Huobi’s assets. Cochran noted that Sun claimed to have $200 million in Ethereum (ETH), but data from Defillama shows that he only has around $113 million in ETH, even when accounting for wrapped ETH (wETH) and sETH. Similarly, Sun claimed that users held $624 million in Tether (USDT), but the exchange allegedly only held $119 million of USDT and the rest was held as “stUSDT.”
Are USDTs “stake”?
Cochran raised further questions about Sun’s actions by claiming that Sun had enabled a feature that allowed users to deposit USDT or TUSD into stUSDT stakes. However, users appear to have directed their funds to Justin Sun’s personal addresses. This is to potentially offset debt to support JustLend or Huobi. Furthermore, Cochran suggested that Justin Sun was taking USDT from user balances on Huobi, converting it into stUSDT, and may be using the underlying USDT to power JustLend in addition to repurchasing TUSD on Binance. According to Cochran, this maneuver allows TUSD to be invested in stUSDT, effectively minting fake assets against unknown equity.
Based on these observations, Cochran estimates that Justin Sun may have accumulated a significant debt of approximately $2.4 billion in user assets across the Huobi and Tron ecosystems, and all of this occurred without users being aware of the dangerous situation. These revelations come on the heels of recent controversies involving Justin Sun and his cryptocurrency startups. Just last week, Sun came under scrutiny for minting $815 million worth of new TrueUSD stablecoins, which were used to capitalize JustLend. stUSDT, in particular, has witnessed exponential growth, reaching over $1.8 billion in less than three months. As we reported as Kriptokoin.com, in March, the US Securities and Exchange Commission (SEC) filed a lawsuit against Sun regarding TRX and BTT tokens.
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