Justin Sun, the CEO of Tron and a controversial figure in the crypto space, is facing allegations of wash trading on two of his exchanges, Poloniex and HTX. Wash trading is a practice of artificially inflating trading volumes by buying and selling the same asset repeatedly. This can create a false impression of market activity and liquidity, and potentially manipulate prices.
According to a report by crypto analytics firm Kaiko, Poloniex and HTX experienced abnormal spikes in trading volumes in August 2023, when most other exchanges saw multi-year lows. The report claims that there was no obvious reason for such a drastic increase in volume and that it did not coincide with any major changes or events.
Poloniex is a US-based exchange that was acquired by Sun’s investment firm in 2019. HTX is the new name of Huobi, a former Chinese giant that was rebranded as Huobi Tron Exchange (HTX) in July 2023. Sun also acquired a stake in Huobi in 2020.
According to Kaiko, Another FTX Could be Possible
The report also points out some suspicious patterns on both exchanges, such as frequent and small trades of Worldcoin, a token launched by Sun in June 2023. Moreover, it reveals that there was a large amount of USDT sold for USDC on HTX and that $400 million worth of USDC was transferred from HTX to Binance.
The dossier suggests that this could be a sign of re-hypothecation, or using the same collateral for multiple loans. It also notes that USDT on HTX was replaced by stUSDT, a decentralized receipt token that represents an investment in real-world assets. stUSDT is more risky than USDT, as its value can fluctuate depending on the performance of the underlying assets.
stUSDT currently offers an annual percentage yield (APY) of 4.67%. Sun has not responded to the allegations yet, but he has been known to defend his projects and initiatives with vigor. In September, he posted a video on Twitter where he appeared as a superhero, claiming to be “defending the crypto frontier with unwavering determination”.
However, many in the crypto community are skeptical of Sun’s motives and methods, especially after he was charged by the SEC in March 2023 for unregistered token sales, wash trading, and paying celebrities to promote his tokens without disclosure.
