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Justin Sun May Be $2.4 Billion Short on Huobi’s User Funds, VC Says

source-logo  cryptobriefing.com  + 1 more 25 September 2023 20:18, UTC

Adam Cochran, Managing Partner at Cinneamhain Ventures, estimates that Justin Sun, who launched the Tron blockchain in 2017 and owns a majority stake in the crypto exchange Huobi, owes customers $2.4 billion but may not have the reserves to cover customer deposits.

HTX, previously known as Huobi, claims to hold $200 million in Ethereum but only has $120.8 million when accounting for wrapped ETH and staked ETH, according to DefiLlama data. The exchange also claims to have $624 million in Tether stablecoins, yet only shows a little over $120 million in its wallets.

What is particularly concerning is that 14.7% of HTX’s reserves are tied up in controversial staked Tether (stUSTD) tokens, which promise 4.2% returns from short-term government debt via Justin Sun’s Tron-based lending platform JustLend. However, Cochran claims that instead of purchasing government bonds, these funds are being funneled to Sun’s crypto wallets, HTX, or Binance.

Last week, Sun came under scrutiny for printing $815 million of new TrueUSD stablecoins, also used to mint stUSDT, to capitalize JustLend.

stUSDT grew to over $1.8 billion in less than three months, as reported by Bloomberg.

“As long as Huobi has substantially all their USDT at stUSDT, then the exchange’s fortunes are inextricably tied to the success of stUSDT’s platform,” said Jonathan Reiter, chief executive of on-chain data analyst firm ChainArgos.

In March, Sun was sued by the SEC for securities law violations and market manipulation involving his TRX and BTT tokens.


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