Is Huobi Experiencing Financial Troubles?

There have been rumors circulating that Huobi, one of the major cryptocurrency exchanges, is facing financial difficulties. Last year, several prominent crypto companies, including FTX, faced a downturn. Another concern is the state of stablecoins, which also seems to be questionable.

The Concerns Surrounding Huobi

Adam Cochran, a well-known researcher, recently revealed that Huobi may be facing financial hardships. Over the past year, a significant amount of assets have been withdrawn by customers, and this trend shows no signs of stopping. Cochran tweeted that there might be a connection between Huobi, Tron (TRX), and USDT.

The Connection Between Huobi, Tron, and USDT

Huobi’s co-founder, Justin Sun, is also associated with Tron. Sun recently introduced a crypto staking service called ‘stUSDT.’ The USDT tokens managed by this service are sold for US Treasury Bonds, which provide a staking return of 4.29%. However, Cochran claims that 98% of the funds on this platform belong to Sun and Huobi themselves, not external investors.

The Unusual Staking Protocol by Justin Sun

But stUSDT doesn’t directly send the USDT to a separate address. Instead, it sends the tokens to the addresses of Huobi, Sun, and Justin Sun’s wallet address on Binance. According to the on-chain analyst, the tokens stored on Huobi may have multiple owners. Huobi and Sun use the USDT to generate returns with stUSDT, while customers expect the tokens in Huobi’s wallets to be solely owned by them.

In total, stUSDT is said to manage $507 million worth of USDT for customers. However, instead of being sent to Tether to be sold for actual dollars and invested in Treasury Bonds, most of the tokens are sent to Huobi and Sun’s own DeFi platform, JustLend. This raises suspicions that Sun may be tampering with customer funds.

Involvement of Binance

There is a possibility that Binance is indirectly involved as well. Cochran states that Binance is often quick to detect risky situations. For example, Binance rapidly sold off FTT when FTX faced issues.

Currently, Binance is reportedly selling USDT in large quantities. It is likely that Binance is aware of what is happening, especially since Sun has an account on Binance. Furthermore, earlier this year, Binance was not willing to acquire Sun’s stake in Huobi.

According to Cochran, Binance chooses to sell its own USDT for DAI on the DeFi platform Curve. Meanwhile, Huobi claims there are no problems, but this story may still develop further.