Crypto entrepreneur Justin Sun transferred more than $200 million of digital tokens to his exchange Huobi Global, according to PeckShield and Arkham Intelligence, after its reserves fell sharply.
Blockchain security firm PeckShield said a crypto wallet it identified as linked to Sun, who calls himself an “adviser” to Huobi, transferred $200 million of Tether Holdings Ltd.’s USDT and $9 million of Ether to the platform. Sun denied making the transfer.
“I have no comments on common users and market makers [who] deposit their funds into [Huobi] exchange,” he said in a Telegram message.
Sun had already injected about $200 million into Huobi in two tranches this year to prop up dwindling reserves. Falling reserves can be an indication that traders are withdrawing funds on concerns about a platform’s viability, as happened when Sam Bankman-Fried’s FTX quickly unraveled in November last year.
The fund transfers came after Huobi’s reserves had shrunk by $33 million over a 24-hour period, according do researcher Nansen. The USDT infusion originated from JustLend, a decentralized crypto lending platform built on Sun’s Tron blockchain, PeckShield and Arkham said.
The latest transfer brought Huobi’s USDT reserves to $282 million, data compiled by Nansen shows. The token now accounts for just over 8% of its total reserves.
Huobi published a blog post on Monday to address what it called “FUD” — an acronym for fear, uncertainty and doubt that’s widely used in crypto. The post didn’t specifically address the decline in its reserves.
Stablecoins like USDT are digital tokens that are pegged to an asset like the US dollar, and often used by crypto investors to move money between exchanges and into fiat currencies.
In the weeks leading up to the transfers, Huobi’s USDT reserves slumped while holdings of another token called staked USDT, or stUSDT, soared. That token was launched about a month ago on the Tron network, and Sun has repeatedly promoted it on X, the social-media platform previously known as Twitter.
A July 4 press release described stUSDT as a “real world asset” product, without specifying what assets it’s backed by, and touted an initial 10% yield. The token, which is pegged to USDT, now carries a yield of 4.29%. Huobi holds 92% of the total circulating supply of stUSDT, according to Tronscan.
A Huobi spokesperson said in response to questions from Bloomberg News on Monday that users stake their USDT on the platform and receive stUSDT in return. Staking refers to the process of locking up tokens to facilitate the functioning of a blockchain and earn rewards. The token accounts for about 12% of Huobi’s reserves, Nansen data shows.
HT, the native crypto token of Huobi, has fallen 41% in the past 12 months. It’s fluctuated over the past few days, repeatedly finding support around the $2.60 level. HT’s market value stands at about $416 million, compared with $37 billion for BNB, the coin of rival exchange Binance.
(Corrects fifth paragraph to clarify that Huobi’s overall reserves fell by $33 million.)