Justin Sun

Watchdog group doubles down on Circle-Tron money laundering claims

The Campaign for Accountability released a new open letter criticizing Circle’s Cross Chain Transfer Protocol.

Nonprofit ethics group Campaign for Accountability (CfA) has doubled down on its money laundering claims against Circle, publishing a new open letter on Dec. 14 claiming that the USD Coin (USDC) issuer is facilitating the funding of terrorist organizations.

The CfA originally made these claims on Nov. 9 in a letter to United States Senators Elizabeth Warren and Sherrod Brown. Circle responded to the claims on Nov. 11, claiming the allegations were based on uncorroborated, unverified social media posts.

The new letter was also addressed to the two U.S. senators and was signed by CfA executive director Michelle Kuppersmith. In the new letter, Kuppersmith took aim at Circle’s Cross Chain Transfer Protocol (CCTP), a blockchain protocol that allows users to transfer USDC between multiple networks, including Tron.

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Crypto exchange HTX sees outflows top $258M following exploit

The Justin Sun-linked crypto exchange HTX had $258 million in outflows after a $30 million exploit in November.

Crypto investors have been moving their assets away from crypto exchange HTX (formerly Huobi) following a Nov. 22 exploit that saw the exchange pause its services and lose $30 million. 

Between Nov. 25 — the day that HTX resumed its services — and Dec. 10, the exchange had some $258 million in net outflows, according to data from DefiLlama.

DefiLlama data shows HTX’s reserves comprise 32.3% Bitcoin (BTC) and 31.8% Tron (TRX). TRX is the native currency of the Tron network, a blockchain launched by Sun in 2017.

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Circle denies claims of illicit financing and ties to Justin Sun

According to an open letter published on Circle’s blog, the company has not provided services to Justin Sun since February.

USD Coin (USDC) stablecoin issuer Circle has denied claims of illicit financing and ties to Tron founder Justin Sun in an open letter posted to Circle’s blog on Nov.

Circle’s open letter to U.S. Source: Circle

The post was published on Nov.

In the letter, Disparte claims that Circle has “recently became aware” of “false” claims being made about it by the “so-called Campaign for Accountability.” The letter adds that “Circle does not facilitate, directly or indirectly, or finance Hamas (or any other illicit actors).” In addition, it does not “bank” or provide financial services to Sun, Disparte claimed.

Disparte dismissed the allegation that Circle facilitated “major flows of funds to Hamas or Hezbollah,” claiming instead that these accusations are based on uncorroborated, unverified posts to social media.

Disparte also claimed that Circle stopped providing services to Sun in February, 2023, stating:

“Neither Mr. Sun and his affiliated companies in February 2023.”

The open letter from Circle appears to have been sent in response to a Nov. 9 letter from the nonprofit ethics group Campaign for Accountability, whose letter claimed that Circle has extensive ties to Sun’s Tron Foundation and major Wall Street investors and that Sun’s cross-chain protocol, SunSwap, is often used for money laundering.

Related: WSJ debacle fueled US lawmakers’ ill-informed crusade against crypto

Claims that crypto is being used to finance terrorism have been commonplace since the Israeli-Hamas war broke out on Oct. The media outlet later corrected its story, stating instead that $12 million in crypto “may have been” sent to these organizations.

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US court issues summons to Tron’s Justin Sun, threatens default judgment if no response

The summons was related to a civil lawsuit filed by the SEC against Justin Sun and others over allegedly offering and selling TRX tokens as unregistered crypto asset securities.

A United States court has issued a summons to Tron founder Justin Sun’s Singapore address in connection to a Securities and Exchange Commission (SEC) civil case.

In an April 12 filing, the U.S. District Court for the Southern District of New York ordered Sun to respond to the summons within 21 days by contacting attorney for the SEC Adam Gottlieb. According to the court, “judgment by default will be entered” should the Tron founder fail to respond — suggesting penalties related to alleged securities law violations.

Sun’s Twitter bio showed his location as Switzerland, while activity on his social media accounts suggested he had recently been in Hong Kong. The Tron co-founder was reportedly born in China and claims citizenship in Grenada, while the Tron Foundation was established in Singapore in 2017.

In March, the SEC filed a civil lawsuit against Sun, the Tron Foundation, the BitTorrent Foundation and Rainberry over the “orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting” of Tron (TRX) as a crypto asset security. The financial regulator alleged Sun engaged in “manipulative wash trading” by helping drive public interest in TRX and BitTorrent (BTT) with the help of celebrities including Soulja Boy, Lindsay Lohan, Jake Paul, and Akon.

At the time of the SEC announcement, all celebrities allegedly involved in the scheme had settled with the regulator, with the exception of Austin Mahone and Soulja Boy. The SEC said it planned to “permanently prohibit” Sun from acting as an officer or director of any firm offering crypto securities, should it prevail in the case.

Related: Judge orders YouTuber ‘BitBoy Crypto’ to appear and address alleged harassment

Sun is far from the only figure in the crypto space who has been the target of U.S. authorities in the wake of the 2022 market crash and multiple high-profile bankruptcies. In January, a bankruptcy judge issued a subpoena to Three Arrow Capital co-founder Kyle Davies. Unlike Sun’s summons, which was sent to a physical address, the U.S. court authorized a subpoena via Twitter in Davies’ case, but he had failed to respond as of the time of publication.

Magazine: Justin Sun Buys Your Company… What Do You Do?

Crypto exchange Huobi returns to profitability in Q1 after restructuring

After cutting employees and benefits, the cryptocurrency exchange reportedly made a $30 million profit during the first quarter of 2023.

According to an April 10 tweet by Justin Sun — the de facto owner of cryptocurrency exchange Huobi Global — Huobi saw $150 million in revenue during Q1 2023 compared with $120 million in expenditures, resulting in a net income of $30 million. Sun said that “a large number of measures were taken to reduce costs and increase efficiency” during the quarter. For Q2 2023, he projected the exchange will bring $187 million in revenue and $76 million in expenses, with a net income of $110 million.

Huobi was one of the largest cryptocurrency exchanges by volume until the off-boarding of its mainland Chinese users began in 2021. Its market share subsequently fell from 19% in 2020 to an estimated 2.2% in Q4 2022. Sun, who claims to be an “adviser” at Huobi Global, reportedly purchased 100% of the exchange’s stake from its co-founders in November 2022 through his entity About Capital. 

Earlier this year, Huobi Global reportedly laid off 20% of its employees and slashed employment benefits as part of restructuring efforts. A major incident occurred on March 10 when the exchange’s native token, Huobi Token (HT), suffered a flash crash leading to a more than 90% drop in its price within hours.

The token has since recovered most of its losses; however, one major user, who goes by the Twitter handle Lantian666, claims to have lost $4 million due to margin liquidations on HT during the flash crash. Lantian666 said they have yet to receive full compensation from Huobi as a result of the incident despite claims from Sun that all users impacted by the crash would be compensated. 

Magazine: Zhu Su’s exchange did $13.64 in volume akshually, Huobi in crisis: Asia Express

SEC files lawsuit against Tron’s Justin Sun and celebrities over crypto securities offering

Among the celebrities who settled with the Securities and Exchange Commission for their role in promoting TRX and BTT were actress Lindsay Lohan, YouTuber Jake Paul and singer Akon.

The United States Securities and Exchange Commission has called for a jury trial against Tron founder Justin Sun for the “orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities.”

In a March 22 filing in U.S. District Court for the Southern District of New York, the SEC named Sun, the Tron Foundation, the BitTorrent Foundation and Rainberry over the offer and sale of Tron (TRX) and BitTorrent (BTT), alleging the tokens were securities. The financial regulator further alleged Sun engaged in “manipulative wash trading,” driving drive public interest in the two tokens by enlisting the help of celebrities.

Among the celebrities promoting TRX and BTT were American rapper DeAndre Cortez Way, also known as Soulja Boy; Austin Mahone; actress Lindsay Lohan; YouTuber Jake Paul; and singer Aliaune Thiam, also known as Akon. Akon was also behind projects to create a “crypto city” in Senegal and Uganda.

“Although the celebrities were paid to promote TRX and BTT, their touts on social media did not disclose that they had been paid or the amounts of their payments,” said the SEC complaint. “Thus, the public was misled into believing that these celebrities had unbiased interest in TRX and BTT, and were not merely paid spokespersons.”

According to the SEC, Sun’s actions in the offer and sale of TRX and BTT violated aspects of the Securities Act. The regulator alleged that the Tron founder was responsible for more than 600,000 wash trades of TRX from April 2018 to February 2019, which led to Sun selling more than $31 million worth of the token.

“While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” said SEC enforcement director Gurbir Grewal. “As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities.”

Related: Celebs who got burned endorsing crypto and those that got away with it

With the exception of Mahone and Soulja Boy, the other celebrities named in the case have settled with the SEC, agreeing to pay more than $400,000 in disgorgement, interest, and penalties. The U.S. regulator said it planned to “permanently prohibit” Sun from acting as an officer or director of any firm offering crypto securities.

In October 2022, the SEC announced it had reached a $1.2 million settlement with Kim Kardashian for touting EthereumMax (EMAX) tokens on her social media accounts. Following a similar settlement with former NBA player Paul Pierce in February, SEC Chair Gary Gensler warned celebrities not to “lie to investors when you tout a security.”

Related: SEC sues Do Kwon, Paxos ready to litigate, SBF’s VPN

Huobi confirms 20% layoffs, denies insolvency rumors

Key Huobi execs, including Huobi Group CFO Lily Zheng allegedly left the company a few months ago following the new shareholders’ takeover.

Huobi cryptocurrency exchange has confirmed plans to lay off 20% of its employees as part of the ongoing restructuring following Justin Sun’s acquisition of the firm.

“The planned layoff ratio is about 20%, but it is not implemented now,” a spokesperson for Huobi said in a statement to Cointelegraph on Jan. 6. The representative emphasized that the allegations of Huobi firing as many as 40% of employees is a rumor.

Huobi has established a new organizational structure after the new shareholders have taken over, the spokesperson said, adding that the firm has adjusted the business departments.

“With the current state of the bear market, a very lean team will be maintained going forward. The personnel optimization aims to implement the brand strategy, optimize the structure, improve efficiency and return to the top three,” Huobi said.

In the statement, Huobi also stressed that recent media allegations of the cryptocurrency exchange’s purported insolvency are untrue. The company’s representative stated:

“We are aware of the comments regarding the Huobi App and the safety of user assets. Such unfounded and inflammatory rumors not only damage Huobi’s brand image, but ultimately affect the interests of Huobi users.”

The news comes shortly after Sun publicly addressed rumors of Huobi’s insolvency, saying that the business state of the exchange was fine and user assets were fully protected. He also promised that Huobi will “fully respect the legal demands of local employees.”

As previously reported, Huobi founder and majority shareholder Leon Li sold his entire stake in the crypto exchange to Sun-linked About Capital in October 2022. Apparently, Huobi subsequently launched its reorganization efforts as some key executives left the company soon after Sun took over the firm.

Related: Silvergate sold assets at loss and cut staff to cover $8.1B in withdrawals: Report

A former Huobi employee told Cointelegraph about leaving the firm a couple of months ago as part of a broader transition when it was rumored that Sun was acquiring Huobi.

“From what I know, there was a management shakeup first,” the former employee noted, asking to remain anonymous. According to the source, Huobi Group chief financial officer Lily Zheng left the company a couple of months ago as well.

Huobi did not immediately respond to follow-up questions from Cointelegraph.

Doubts mount over Huobi’s future as harsh layoff rumors denied

Canceled bonuses, pay disputes, massive layoffs and a communication blackout has been claimed as part of the goings-on at the crypto exchange.

Update: Huobi later confirmed it plans to lay off up to 20% of its workforce, adding that the said plan is not implemented yet.

Speculation on Twitter that crypto exchange Huobi has laid off staff and shuttered internal communications have prompted the community to advise users to withdraw funds, despite an adviser to the exchange denying the rumors.

In a Jan. 5 tweet, Huobi adviser Justin Sun addressed rumors of purported insolvency, saying the business development of the exchange was “good” and the “security of users’ assets will always be fully protected.”

Sun also seemingly brushed off speculation around disgruntled staff, saying Huobi will “fully respect the legal demands of local employees.”

Earlier, on Jan. 3, crypto journalist Colin Wu reported that Sun changed Huobi employee salaries from being paid in fiat to being paid in either Tether (USDT) or USD Coin (USDC). Wu claimed the staff who disagreed with the change could be laid off.

Citing insiders, Wu reported in December that Huobi canceled year-end bonuses and was preparing to cut up to half of its 1,200 staff.

The move to change the salary payment from fiat to stablecoins sparked protests from some employees, according to Wu.

A Jan. 4 tweet from the Twitter account BitRun claimed that a “communication group with internal employees” at the exchange had been shut down and “all communication and feedback channels with employees” were blocked.

BitRun added they weren’t ruling out a revolt by Huobi employees who could “directly rug away user assets or programmers add backdoor Trojan horses” claiming the practice was “not protected by domestic laws.”

Related: ‘Old money has all but fled,’ Huobi co-founder discusses challenges of running $400M VC fund

Huobi is based in Seychelles, with offices in Hong Kong, the United States, Japan and South Korea. It’s a publicly listed company on the Stock Exchange of Hong Kong.

The ominous warning was enough for one Twitter user to claim Huobi “seems to be melting down in real-time” and others suggested users withdraw funds from the exchange due to the rumors.

Huobi Token (HT) is down nearly 7% over 24 hours, according to CoinGecko data.

Tron’s stablecoin USDD loses dollar peg on suspected selloff by Alameda Research

Wallets associated with Sam Bankman-Fried’s Alameda Research could be behind the dollar depeg, alleges Tron’s founder.

In April 2022, the Tron network launched USDD, a token pegged to the United States dollar as an “over-collateralized stablecoin,” meaning its likelihood of slipping below $1 should be lower due to excessive reserves backing its valuation.

USDD stablecoin slips below $1 peg

But it was not enough to keep USDD’s price anchored to $1 on Nov. 8 when some whales dumped over 11 million USDD tokens to seek exposure in rival stablecoins Tether (USDT) and USD Coin (USDC). A day later, USDD’s price fell to as low as $0.96, followed by a modest recovery to $0.98 on Nov. 10. 

USDD price performance on a 24-hour adjusted timeframe. Source: Messari 

The selling pressure was visible more broadly in the USDD liquidity pool on Curve’s decentralized finance protocol. As of Nov. 10, the pool was heavily imbalanced, holding nearly 82.50% in USDD and the rest in USDT, USDC and Dai (DAI) stablecoins. 

Tron founder Justin Sun speculates that Alameda Research, a crypto hedge fund headed by FTX’s Sam Bankman-Fried, could be the whale dumping its USDD holdings to avoid insolvency. Alameda’s balance sheet reportedly was 50% FTX Token (FTT), FTX’s native token that has recently fallen more than 90%.

Miscalculated collateral reserves

USDD is issued by Tron DAO Reserve (TDR), which also serves as the custodian of its collateral. TDR is primarily responsible for selling the collateral to maintain USDD’s peg in the event of a sell-side shock.

In theory, USDD appears sufficiently backed by a $2-billion pool of crypto collateral in the form of Bitcoin (BTC), Tron (TRX) and USDC, with the reserves reportedly outweighing the stablecoin supply by over 283%.

USDD supply versus collateral. Source: USDD.io

But there’s a catch.

Currently, almost all the stablecoin collateral worth in TDR’s reserve wallets are staked and earning yields in JustLend, the largest lending protocol in the Tron ecosystem by total-value-locked (TVL). Meanwhile, 99% of TRX collateral is locked inside a “staking governance” contract.

TDR also appears to be incorrect including burned TRX worth over $725 million as collateral. Overall, that leaves the DAO with about $600 million worth of USDC and $236 million worth of BTC in its liquefiable reserves.

In other words, an almost 113% collateral ratio versus the 283% boasted.

Bitcoin, TRX prices slide

USDD’s collateral ratio could fluctuate further as its reserve assets, BTC and TRX, undergo price declines.

Notably, BTC’s price has plunged by more than 22% week-to-date to around $16,500 in a crypto market meltdown led by the Alameda-FTX fiasco. On the other hand, TRX wiped approximately 12% off its valuation in the same period, trading at around $0.05 on Nov. 10.

TRX/USD weekly price chart. Source: TradingView

The Tron token now eyes a break below its support long-standing support confluence, comprising its 200-week exponential moving average (200-week EMA; the blue wave) near $0.052 and its 0.236 Fib line near $0.055.

This may push TRX on an extended decline toward the $0.022-$0.030 range (marked in red in the chart above). This area was instrumental as a consolidation channel from August 2020-January 2021 and January 2019-July 2021.

Furthermore, it served as support between February and November 2018.

Related: Buying Bitcoin ‘will quickly vanish’ when CBDCs launch — Arthur Hayes

At the same time, Bitcoin has entered the breakdown phase of its prevailing inverse-cup-and-handle pattern, now eyeing $14,000 as its primary downside target.

BTC/USD weekly price chart. Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Why is the price of Huobi Token up 12% today as rest of the market slumps?

HT price makes further gains as Huobi Global opens SEAN spot trading, but the rally might be short-lived as technicals flip bearish.

Huobi Token (HT) has been up 12% in the last 24 hours and is one of the few cryptocurrencies bucking the general downtrend.

Trading at over $7, HT’s price is up over 80% since the beginning of this week, which is also its best weekly performance since February 2021.

HT/USD daily price chart. Source: TradingView

HT’s intraday gains coincide primarily with crypto exchange Huobi Global announcing the opening of Starfish Finance (SEAN) spot trading on its platform. 

Plans to “empower” HT

Additionally, HT’s impressive weekly gains were related to About Capital Management. On Oct. 8, the Hong Kong-based investment firm announced purchasing Huobi Global, one of the leading cryptocurrency exchanges by volume.

HT serves as a utility token inside the Huobi Global ecosystem. Justin Sun, the founder of the Tron blockchain project and reportedly the core backer of About Capital, said on Oct. 10 that they would empower HT to boost Huobi Global’s brand and business endeavors. 

Nevertheless, the HT price rally has exposed it to potential profit-taking scenarios, per a mix of technical indicators.

Huobi Token overbought? 

On the daily chart below, HT’s relative strength index (RSI) has crossed above 70, which is considered an “overbought” signal. That typically follows with the price entering a consolidation or correction period.

HT/USD daily price chart. Source: TradingView

Similarly, the HT price rally witnessed this week accompanies a drop in trading volumes, suggesting traders have been growing doubtful about the longevity of the uptrend. Again, it could result in a price correction in the coming days.

The third bearish signal comes from HT’s weekly chart.

HT/USD weekly price chart. Source: TradingView

Notably, HT’s price now tests a resistance confluence made up of its 50-week exponential moving average (50-week EMA; the red wave), the 0.786 Fib line near $7.30, and a horizontal level near $7.40 that has historically served as support but now acts as a price ceiling.

Related: Crypto markets to see ‘explosive volatility’ soon: Arcane Research

The event of a pullback from this resistance confluence could have HT drop toward the $3.4–$3.8 area by the end of this year, a 50% price decline.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.