In a recent thread on X, Dylan LeClair, Head of Market Research for Bitcoin Magazine and one of the industry’s leading on-chain metrics experts and market analysts, delves into a complex web of allegations surrounding the cryptocurrency industry, involving prominent figure Justin Sun and the platforms Huobi, Binance, TUSD, stUSDT, and USDT.
LeClair’s analysis highlights a potential drain of real USD liquidity from the crypto ecosystem through deceptive practices. Here, we provide an in-depth overview of his claims and their implications.
Justin Sun’s Acquisition of Huobi
In late 2022, reports emerged that Justin Sun had acquired a controlling stake in Huobi, subsequently renaming it HTX. At the time, Huobi held over $1.5 billion in USDT deposits. An intriguing development soon followed: the substitution of USDT funds with a lesser-known token called stUSDT. This transformation largely escaped the notice of Huobi users.
The Enigma of stUSDT
stUSDT, purportedly under Justin Sun’s control, is marketed as a token invested in “Real World Assets” like Treasury bills. However, LeClair’s investigation suggests that no such investment in real-world assets takes place. The flow of funds from Huobi’s USDT to stUSDT, and subsequently to JustLendDAO, appears to follow a different path.
This transition is meticulously traceable on-chain, raising concerns about the authenticity of stUSDT’s investment claims.
Moreover, stUSDT and USDT are treated interchangeably on Huobi, as evidenced by the absence of stUSDT trading pairs. Instead of being used for genuine investments, USDT appears to be funneled into JustLend, a platform under Sun’s control, without being burned. This creates a scenario where Huobi users unwittingly hold stUSDT instead of the USDT they believed they possessed.
Suspicion Surrounding TUSD
LeClair’s investigation also implicates TUSD, another stablecoin allegedly controlled by Justin Sun. Over the past six months, a significant portion of TUSD burns has been linked to just two wallets associated with Sun. This pattern raises questions about the authenticity of TUSD’s operations.
A convenient development emerges: TUSD can now be “staked” to mint stUSDT, mirroring the alleged manipulation observed with USDT.
The USDT to stUSDT Swap
In theory, the process involves minting over 500 million TUSD, sending it to Huobi, then transferring it to Sun’s wallets before parking it in JustLend, where it mints stUSDT. The TUSD, now considered burned, leaves stUSDT on Huobi.
The Ripple Effect
Huobi eventually sends all the TUSD to Sun’s wallet, which is then deposited into JustLend and his stUSDT mintproxy. This creates a facade, where stUSDT appear to be as regular USDT within Huobi’s user interface.
The End Game and Its Impact
The motives behind this complex scheme remain unclear. However, LeClair suggests that selling the largely stUSDT holdings for USDC on Huobi may be part of the strategy.
Data from @KaikoData reveals substantial USDT-to-USDC trading on Huobi in just over two months. This suggests that the majority of the supposedly USDT transactions are, in reality, stUSDT being exchanged for USDC.
Similar Patterns on Binance
According to LeClair, the deception does not appear to be limited to Huobi. Binance has also exhibited unusual patterns, particularly following the collapse of SVB. Data indicates a significant influx of USDC buying while selling USDT on Binance.
Binance’s relationship with TUSD is another point of concern. Shortly after the SVB collapse, zero-fee trading was introduced for BTC/TUSD, ETH/TUSD, and BNB/TUSD pairs.
LeClair also draws attention to the questionable timing of TUSD mints, which coincided with market selloffs. He raises doubts about the reliability of TUSD attestations and its distribution patterns.
The Bigger Picture
In conclusion, LeClair’s analysis paints a grim picture of alleged deception within the crypto industry. His claims include Justin Sun’s role in siphoning USD liquidity through various fake stablecoins and manipulating the crypto ecosystem.
