- Tether’s value is declining due to potential insolvency of Huobi.
- Binance offloaded USDT when investigations into Huobi executives began.
- Cochran’s analysis shows Huobi has only $90 million in USDT and USDC holdings.
Tether is undergoing a significant decline in value. Adams Cochran, a highly respected business analyst in the crypto industry, believes the probable cause behind this downturn is the potential insolvency of Huobi. Cochran astutely observed that Binance, a prominent cryptocurrency exchange, began offloading substantial amounts of USDT stablecoins precisely when the authorities initiated investigations into Huobi executives and certain individuals associated with Tron. This development occurred shortly after Tron’s founder, Justin Sun, introduced the stUSDT stablecoin.
According to Cochran’s research, Binance, like the FTT case, frequently has early knowledge of risky assets or industry-related problems due to its extensive reach and connections. He highlights that the recent USDT sell-off aligns with the authorities’ interrogation of Huobi employees, indicating Binance’s ability to stay informed about such events.
Cochran explains that the recent occurrence transpired after a prolonged period of consistent depreciation of USDT on the Huobi exchange. Sun’s introduction of stUSDT, a token purportedly backed by USDT reserves invested in government bonds, instigated this depreciation, generating a notable yield of 4.29%.
In his comprehensive analysis, Cochran unveiled that a staggering 98% of the tokens are held by Sun and Huobi. Furthermore, he demonstrated that users’ USDT staked into stUSDT is seamlessly transferred to a Huobi deposit address. Drawing from his astute observations, Cochran deduced that if stUSDT were genuine, there would have been potential redemptions of up to $500 million from Huobi addresses on Tron. However, he substantiated his claim by presenting a screenshot from his investigation, which unequivocally refutes the existence of such redemptions. Instead, the mint proxy efficiently dispatches tokens directly to the main address.
Cochran effectively demonstrated the token flow through a screenshot, illustrating that the tokens within the mentioned address are being transferred to various addresses under Sun’s control, including his Binance address. Additionally, Cochran unveiled that a substantial portion of the stablecoin tokens are allocated towards Sun’s DeFi ventures, such as JustLend.
Based on the collected data, Cochran observed that Huobi possesses a mere $90 million in combined USDT and USDC holdings. Nevertheless, Huobi’s “Merkle Tree Audit” indicates that Huobi users hold $630 million worth of USDT, with a wallet balance of $631 million USDT.
