Speculation Arises Over Tether Sell-Off Amid Huobi Insolvency Concerns

Vignesh Karunanidhi
Speculation Arises Over Tether Sell-Off Amid Huobi Insolvency Concerns
Source: FT

In a series of speculative tweets, analyst Adam Cochran has stirred discussions in the crypto community, suggesting that the recent sell-off of Tether (USDT) may be linked to potential insolvency issues at Huobi.

The speculation gained traction after Cochran highlighted a series of events, indicating a correlation between the sell-off and Huobi’s alleged financial troubles. According to Cochran, Binance, another major exchange, initiated large-scale sales of USDT, potentially signaling their awareness of risky assets or issues within the industry.

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Cochran pointed out that the timing of Friday’s rapid sell-off coincided with the period when Huobi employees might have been questioned by authorities. Additionally, there had been weeks of steady USDT declines on Huobi, further adding to the speculation.

Cochran raises questions on Justin Sun’s stUSDT

The analyst also raised questions regarding the launch of “stUSDT” by Justin Sun, founder of Tron. Sun claimed that “stUSDT” was backed by government bonds, offering a 4.29% yield. However, Cochran pointed out that the majority of this token was held directly by Sun or Huobi, with minimal evidence of redemptions from Huobi addresses into redeemed Tether.

Moreover, Cochran noted that much of the USDT seemed to be flowing into Justin Sun’s own DeFi positions, raising concerns about the actual assets held by Huobi.

Cochran’s speculative analysis also indicated discrepancies in Huobi’s reported wallet balances, suggesting that users might hold a higher balance than what is actually available on the exchange.

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The speculation has prompted discussions about Binance’s motives for selling off USDT. Cochran stated two potential reasons: Binance may aim to promote stables they can control and profit from, or they might be aware of Justin Sun’s alleged lack of actual USDT reserves, potentially leading users to dump USDT en masse to exit the exchange.

As of now, these claims remain speculative, and both Huobi and Justin Sun have not addressed the concerns raised by Cochran’s tweets.