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 pointed out Huobi’s financial situation on Twitter. He also made some surprising claims regarding his role in Justin Sun’s potential bankruptcy. Here are the details…
There are bankruptcy claims for the cryptocurrency exchange
Cochran’s Twitter thread, which created shock waves in the cryptocurrency community, was trending today. Because he claimed Justin Sun may owe customers a staggering $2.4 billion. It also suggests that there are doubts about whether it has the reserves to cover these 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 said Sun claimed to have $200 million in Ethereum (ETH). However, he noted that data from Defillama shows that even when wrapped ETH (wETH) and sETH are taken into account, there is only around $113 million in ETH. Similarly, Sun claimed that users held $624 million in Tether (USDT). However, it is stated that there is only 119 million dollars of USDT on the exchange. It is also claimed that the rest is 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 thinks Justin Sun is in debt to the Huobi and Tron ecosystems. That means the user may have accumulated a significant debt of approximately $2.4 billion in assets. He also guesses that all this happens without the 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, which was used to capitalize JustLend. StUSDT, in particular, has surged to over $1.8 billion in less than three months. Thus, it witnessed exponential growth. As we reported as Kriptokoin.com, the US Securities and Exchange Commission (SEC) took action in March. Because he filed a lawsuit against Sun regarding TRX and BTT tokens.
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