In a series of posts on X (formerly Twitter), crypto expert Dylan LeClair called out prominent crypto figure and founder of TRON, Justin Sun over what he regarded as a “web of deception.” LeClair, in a long trail analysis, tied knots between Sun, his enterprises, and “fake” stablecoins being swapped for USD.
In particular, Leclair accused Justin Sun of wash-trading crypto tokens on the crypto exchange Huobi, now known as HTX. Sun took over the exchange in an acquisition last year, which LeClair believes now sits at the center of the opaque transactions.
While citing several data, LeClair alleged that following the exchange’s acquisition, Sun has been swapping the deposited USDT with stUSDT without customers noticing. At the time of the takeover, HTX had $1.5 billion in USDT deposits but recent data shows that has reduced significantly.
According to LeClair, stUSDT is a token controlled by Sun that claims to provide yield by investing in “Real World Assets” such as Treasury bills. However, LeClair said on-chain analysis and data show that no such investments in RWAs occur.
Furthermore, LeClair referenced the findings of ChainArgos, which said
We’ve seen this one before — a closely associated ecosystem managed and run by one of the crypto’s biggest personalities and a “staking” system that doesn’t send the stablecoins where they’re advertised.
As per the analysis, stUSDT and USDT are considered the same assets on Huobi, as evidenced by the lack of stUSDT trading pairs. LeClair continued by citing Bloomberg data, which shows that USDT reserves have declined in contrast to the growing stUSDT, which is now 14.5% of the exchange’s total reserves.
As seen in Bloomberg, you can see a shift in Huobi’s reserves from July 1 to September 15. On July 1, USDT made up 18.8% of reserves, but by September 15, this had dwindled to just 4.7%, while Sun’s stUSDT, grew to represent 14.5% of reserves.https://t.co/s00oILWFls
6/ pic.twitter.com/Yd1u6XyZTK
— Dylan LeClair 🟠 (@DylanLeClair_) October 4, 2023
Pointing to on-chain data, LeClair explained that what Sun does is mint TUSD, which is then used to mint stUSDT, then swapped for USDT on Huobi. The USDT is then sent to JustLend, controlled by Sun, with Huobi users holding stUSDT instead of USDT.
i.e.
> 500m of TUSD is minted
> sent to Huobi
> then sent to Sun’s wallets
> parked in JustLend, mints stUSDT
> stUSDT to Huobi
> TUSD gets burned, stUSDT on Huobi remains“real world assets”https://t.co/k4LyxcJNP1
11/ pic.twitter.com/WMZMXR9NeI
— Dylan LeClair 🟠 (@DylanLeClair_) October 4, 2023
More worrying are the analysts’ claims that Sun has been using these complex transaction methods to increase his USD liquidity by buying USDC and USDT heavily. “Huobi users, get out of USDT, into another asset, and withdraw immediately,” he ended
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