Justin Sun’s $2.4 Billion Debt Scare in Huobi: Adam Cochran
In a shocking turn of events, Justin Sun, the founder of the Tron blockchain and a majority stakeholder in the cryptocurrency exchange HTX Global (formerly Huobi), is now facing allegations of insolvency that could potentially have far-reaching implications for the crypto industry. Adam Cochran, Managing Partner at Cinneamhain Ventures, recently took to Twitter to make some startling claims regarding the financial health of Huobi and Justin Sun’s role in its potential insolvency.
Cochran’s Twitter thread, which has sent shockwaves through the cryptocurrency community, suggests that Justin Sun may owe customers a staggering $2.4 billion, with doubts about whether he possesses the reserves to cover these customer deposits. The situation appears even more precarious considering recent actions by Sun and his cryptocurrency ventures.
In a series of tweets, Cochran outlined his concerns about the discrepancies between Justin Sun’s claims and the actual state of Huobi’s assets. Cochran pointed out that Sun has asserted ownership of $200 million in Ethereum (ETH), but data from Defillama shows only around $113 million in ETH, even when accounting for wrapped ETH (wETH) and sETH. Similarly, Sun claimed that users hold $624 million in Tether (USDT), but there is purportedly only $119 million USDT within the exchange, with the remainder held in “stUSDT.”
Oh btw Huobi is probably insolvent again.
Claims to have $200M in ETH, defillama shows less than $113M even if you add in weth and steth.
Claims users hold $624M in USDT. But there is only $119M USDT in the exchange. pic.twitter.com/zghTpGRBzn
— Adam Cochran (adamscochran.eth) (@adamscochran) September 25, 2023
Cochran raised further questions about Sun’s actions, alleging that Sun had enabled a feature allowing users to stake either USDT or TUSD into stUSDT staking. However, users seem to have directed their funds to Justin Sun’s personal addresses instead, potentially to offset debts to prop up JustLend or Huobi.
Moreover, Cochran suggested that Justin Sun might be taking USDT from user balances on Huobi, converting it into stUSDT, and utilizing the underlying USDT to support JustLend, in addition to buying back TUSD on Binance. This maneuver, according to Cochran, allows for TUSD deposits into 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, all without users being aware of the precarious situation.
These revelations come on the heels of recent controversies involving Justin Sun and his cryptocurrency ventures. Just last week, Sun faced scrutiny for printing a staggering $815 million worth of new TrueUSD stablecoins, which were then used to capitalize JustLend. stUSDT, in particular, has witnessed exponential growth, surging to over $1.8 billion in less than three months.
This is not the first time Justin Sun has found himself in hot water with regulatory authorities. In March, the U.S. Securities and Exchange Commission (SEC) sued him for alleged securities law violations and market manipulation related to his TRX and BTT tokens.
- Justin Sun Transfers 200 Million USDT To Huobi Amid Executive Investigation
- Huobi Under FUD: High-Level Personnel Investigated By China, Insolvency Concerns, And USDT Sell-Off Fears
- Justin Sun’s Tweet Sparks Speculation Of China’s Crypto Comeback