HTX, the Justin Sun-advised crypto exchange, has been rapidly redeeming massive quantities of wrapped bitcoin (WBTC). This started on November 24 with HTX redeeming approximately 5,182 bitcoins and has continued with the additional redemption of 2,166 bitcoins on December 1.

Both of these transactions were unusual to observe, given that WBTC has no 24-hour volume on HTX. 

Additionally, there is no WBTC included in the proof-of-reserves for HTX. 

Furthermore, neither of the two bitcoin addresses that these redemptions largely ended up in, 1Fgpaz4kXyz35WKMGk2Yo19mR9pk3KC8zx and 1Apv2EuoHyCpKsxdFEPv5GSddqDMt3bTN6, are included in the proof-of-reserves.

Read more: Justin Sun’s USDD removes 12,000 BTC without DAO approval

Furthermore, the total amount redeemed, approximately 7,300 bitcoin, would represent approximately one-third of all bitcoin included in the HTX Proof-of-Reserves.

Despite these apparent issues with these redemptions, they have been processed quickly by WBTC, each in about five hours. Other WBTC users sometimes need to wait nearly two weeks for their redemptions to process.

This Sun-advised exchange redeeming assets it hadn’t previously disclosed may reignite the controversy around Sun’s involvement in the custody of WBTC. Especially as he has launched hypocritical criticisms at competitors. 

Sun, for his part, has been cozying up to the United States president-elect, purchasing a massive stake in World Liberty Financial, the project endorsed by the sexual predator. Sun is also currently the target of a Securities and Exchange Commission lawsuit that alleges he engaged in wash-trading, price-manipulation, and hired celebrities without disclosure to sell securities he was selling without registration.

Protos reached out to HTX to clarify these issues, but at press, it had not responded. 

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HTX, the crypto exchange advised by controversial figure Justin Sun, recently redeemed 5,182 wrapped bitcoin (WBTC) worth approximately $500 million, according to the official WBTC dashboard.

This comes just over three months after Sun entered into a new joint venture with BiT Global and BitGo to manage the custody of bitcoin for WBTC.

On-chain data for WBTC suggests this is the sixth-largest redemption of WBTC of all time and is the largest redemption in the last 635 days.

Threshold Network delegate ‘mrsthreshold.eth.limo’ highlighted that this large redemption was processed in only a few hours, whereas other recent smaller redemptions often seemed to take several days to process.

However, despite that delayed CoinList redemption, other entities have been able to redeem more quickly, including a redemption today by Tokka Labs, a Wintermute burn yesterday, and a couple of earlier burns this month. However, last month Wintermute did have to wait 12 days for a small mint.

Protos reached out to WBTC to determine why the CoinList redemption and Wintermute mint took longer to complete but had not received a response by press time.

This HTX address appears to have been receiving significant quantities of WBTC from Binance recently, including an additional 590 bitcoin after this redemption. 

Read more: WBTC supply contracts this month following Justin Sun custody drama

Taylor Monahan also highlighted that HTX appeared to have changed its deposit address shortly before these redemptions.

HTX and WBTC

This redemption of WBTC by HTX is strange because it’s not a commonly traded asset on the exchange, with 0 volume over the last 24 hours. 

Furthermore, the HTX proof-of-reserves doesn’t include any WBTC at all. 

Additionally, the address that this redemption came from, 0xbE6d2444a717767544a8b0Ba77833AA6519D81cD, is not included in the HTX proof-of-reserves. Nor is 1Fgpaz4kXyz35WKMGk2Yo19mR9pk3KC8zx where the majority of these redeemed bitcoins ended up. 

Furthermore, the 5,182 bitcoins would represent more than one-quarter of all user bitcoins on HTX.

Protos reached out to HTX to determine why it had so much WBTC that was not included in the proof-of-reserves, but at press, it hadn’t responded. 

Justin Sun’s bitcoin problems

This redemption highlights some of the bitcoin-related problems that Sun has recently been struggling with. 

Read more: Coinbase to delist WBTC months after Justin Sun controversy

These include the fact that nearly half of all ‘bitcoin’ held at HTX is actually Bitcoin-on-Tron offered by Sun-owned Poloniex. This tokenized form of bitcoin doesn’t disclose where it custodies the bitcoins, provides no proof-of-reserves, and is far larger than WBTC on Tron. 

Additionally, Sun-linked pseudo-algorithmic stablecoin USDD recently removed 12,000 bitcoins from its reserves without any approval from the so-called decentralized autonomous organization (DAO) that’s supposed to govern the stablecoin. 

Furthermore, the launch of Coinbase’s tokenized bitcoin competitor Coinbase Wrapped Bitcoin (cbBTC) has led Sun to launch hypocritical attacks on this new competitor. Coinbase in turn has decided to delist WBTC. 

These various discrepancies highlight Sun’s willingness to freely move assets between entities he officially or unofficially controls. 

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The post Justin Sun’s HTX redeems $500M in WBTC it wasn’t supposed to have appeared first on Protos.

In an unexpected turn of events, Justin Sun has denied that a photo he posted on X (formerly Twitter) on his birthday was AI generated – a conclusion many individuals jumped to after noticing that Sun’s hand appears to have seven fingers and the photo features two different cakes with “Happy Birthday” spelled incorrectly.

Well, many online commentators are eating their words today, much like Justin Sun was eating two ‘RAPPY SLBTHDAY BOSS’ cakes on his 34th birthday.

Justin Sun’s birthday picture received a community note before he claimed that the picture “wasn’t generated by AI; it’s actually a scene of my birthday celebration in the office, taken by our team.”

The attached correction on his birthday image stated, “This image is AI generated. You can see the letters on the cake and the extra fingers/melded hands as proof.”

Read more: Scoop: Justin Sun falsely claimed diplomatic immunity in lawsuit

However, despite the community note, Justin Sun has uploaded filmed footage of his birthday event in which he can be seen surrounded by staff while walking to his cake.

It’s unclear why Justin Sun has seemingly uploaded an AI-generated photo. Perhaps Sun’s most impressive skill is how he’s able to add and subtract fingers as he pleases.

Denial proves Sun’s amazing abilities

Justin Sun’s denial puts to rest many doubters’ claims that he’s been suffering from serious solvency issues and numerous other problems. Even Protos’ own prior coverage questioned the reserves of the Sun-advised HTX exchange and the reality behind his numerous citizenships.

Indeed, now it’s impossible to suggest the crypto-billionaire could be in trouble: the guy was pictured with seven fingers and can probably type faster than an entire team of developers.

It’s also worth noting that Sun’s ability to brush off the fact that his employees misspelled Happy Birthday twice on the cakes suggests a Verge article and subsequent lawsuit in California stating that he was an angry, volatile, and overall terrible boss were simply more media lies.

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HTX, formerly Huobi, is an exchange deeply connected to controversial crypto entrepreneur and trader Justin Sun, and its activities raise concerns about solvency and Sun’s effective control of user assets.

Ownership

While Sun denies controlling HTX, he’s previously admitted to being an ‘advisor’ and the business itself has previously described him as its leader. 

It appears that the acquisition of Huobi by About Capital Management in 2022 — a move that coincided with Sun’s appointment to the Huobi Global Advisory Board — marks the point at which his relationship with the exchange started to deepen.

Even the rebranding of Huobi to HTX may have been connected to this change in ownership, with the former owners, New Huo Tech and HBIT, openly denying connections to Huobi online and threatening lawsuits against the exchange for continuing to use the name. 

Additionally, Sun has reportedly attempted to sell his stake to Binance, and he claims that he owns a majority stake. 

stUSDT

Staked Tether (stUSDT) is a Sun-connected project that purports to invest USDT into yield-generating activities like purchasing United States treasuries.

Read more: Justin Sun’s empire may be on the verge of collapse

This asset’s marketing claims that it’s controlled by an entity called the Real World Asset Decentralized Autonomous Organization; however, Protos has been unable to find any decentralized or autonomous governance structures for this project.

We’ve reached out to stUSDT to determine if there’s a governance structure we missed and to ask for comment on whether it feels that it’s adequately decentralized and autonomous to refer to itself as a DAO. At press, it has not responded.

On Tron, 88% of this token is held in TDToUxX8sH4z6moQpK3ZLAN24eupu2ivA4, an HTX address.

On Ethereum, over 96% of the total supply of this token is held in 0x176F3DAb24a159341c0509bB36B833E7fdd0a132, an address labeled as ‘Justin Sun’ on Etherscan.

More troublingly, a review of the HTX proof-of-reserves reveals that much of the USDT on the exchange has been replaced with stUSDT. HTX claims in its proof-of-reserves (which it falsely describes as an audit) that it has $610 million worth of USDT. 

However, utilizing the tool HTX distributes to verify its proof-of-reserves, we can determine that the category described as ‘USDT’ actually contains other assets, including $460 million worth of stUSDT, representing approximately three-quarters of all USDT on the exchange.

Additionally, the USDT category includes $79 million worth of Aave Ethereum USDT, representing funds deposited into the Aave lending protocol.

Even more troubling may be the nearly $12 million USDT held as jUSDT, which is USDT deployed into the JustLend protocol on Tron.

These activities raise serious concerns about the quality and safety of USDT reserves on HTX.

USDD

USDD is a Sun-affiliated protocol that describes itself as an ‘algorithmic stablecoin’ despite the lack of any real algorithm or way to redeem the token once issued.

It’s supposedly governed by a decentralized autonomous organization (DAO), the TRON DAO Reserve; however, Protos has only been able to identify a single proposal that the DAO has voted on. 

Read more: Justin Sun’s empire crumbles as USDD depegs again

Even more troubling is the fact that a significant portion of the reserves, approximately $125 million worth of TRX, are stored in TZ1SsapyhKNWaVLca6P2qgVzkHTdk6nkXa, which is also included as an address involved in HTX’s proof-of-reserves.

This means the TRX tokens in this address are counted both as assets for HTX and as collateral for USDD. Furthermore, there are no governance proposals in the TRON DAO Reserve discussing the decision to store these assets at Sun-affiliated HTX.

WBTC on Tron

Wrapped Bitcoin on Tron (WBTC) is a product that was offered by Sun-owned Poloniex, that purported to transform bitcoin into a token that can be used on Tron.

Poloniex doesn’t publicly disclose where it stores the reserves for this product and it’s been unwilling to share them with Protos when we have reached out previously. Furthermore, Poloniex has since delisted the asset after a depeg, making it unclear if anyone can redeem it through Poloniex.

Despite the many issues with this asset, a review of the HTX proof-of-reserves reveals that of the 25,735 bitcoins stored on HTX, a total of 14,108 — more than half of the total — are this wrapped version with no transparency.

Read more: Binance banned Tron Foundation for market manipulation, report

Ethereum

A significant portion of the Ethereum on HTX is actually Lido Staked Ether (stETH) and ether bridged to the HTX-affiliated HECO Chain.

HTX’s proof-of-reserves reports a total of 92,630 ether on the exchange, but the vast majority of that is the 52,103 stETH and the 37,043 ether bridged to HECO Chain. There are a paltry 3,484 traditional ether on HTX.

HTX Token

Even when Sun was trying to downplay his influence over HTX, he was still willing to admit that he owned a large quantity of the Huobi Token.

Recently, the Huobi Token was somewhat converted to the HTX token, with a partial conversion being offered to Huobi Token holders. This conversion frustrated many holders, especially since it seemed to fulfill many of the same functions as the previous token but wasn’t offered as a direct 1:1 upgrade.

Less than 20% of the total HTX token supply was reserved for previous Huobi Token holders.

HTX token is purportedly governed by the HTX DAO. However, the ‘community autonomy’ for the DAO is still listed as ‘coming Soon.’ Weakening the argument that this will be the case is the fact that portions of the documentation and FAQ for HTX DAO are hosted on HTX. 

Furthermore, tokens were previously ‘unlocked’ by performing various activities on HTX, including hitting certain trading volumes.

Other concerns

HTX was hacked last year but is still lying about it, falsely claiming to Protos that “the platform has never had any security incidents in the past 10 years.” Even when pressed, and previous disclosures of the hacks were highlighted, HTX continued to lie and falsely claim that no security incidents had occurred. 

Additionally, HTX-affiliated Heco Chain was also previously hacked. Sun claimed that HTX would be able to fully cover these losses.

Assets from HTX are being used across a wide variety of Sun-connected protocols and entities, and the vast amounts of USDT and BTC removed raise concerns about both the quantity and quality of assets at HTX.

These issues with the assets at the beleaguered exchange are only one part of the picture, with Sun additionally facing a lawsuit from the Securities and Exchange Commission that alleges he engaged in wash-trading and market manipulation.

Protos has reached out to HTX with questions about its reserves but at press it has not responded.

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The post Justin Sun-advised HTX plays games with its reserves appeared first on Protos.

Justin Sun recently took to X (formerly Twitter) to brag about how much of his personal wealth he stores on his cryptocurrency exchange, HTX. The image he provided seems to claim that he currently has 28,613 bitcoin on the platform, worth about $1.7 billion.

However, the HTX ‘proof of reserves’ dated February 1 appears to show that HTX had a total of 21,651 bitcoin, approximately three-quarters of the amount that Sun claims to hold on the exchange.

HTX provides a tool that can be used to verify the results of the proof of reserves process. The ‘snapshot’ included lists the addresses considered for this analysis. The addresses that exist on Bitcoin that are disclosed in this snapshot are:

• 143gLvWYUojXaWZRrxquRKpVNTkhmr415B, which has a balance of approximately 1,094 bitcoin.
• 12qTdZHx6f77aQ74CPCZGSY47VaRwYjVD8, which has a balance of approximately 8,970 bitcoin.
• 1HckjUpRGcrrRAtFaaCAUaGjsPx9oYmLaZ, which has a balance of approximately 15 bitcoin.
• 1LXzGrDQqKqVBqxfGDUyhC6rTRBN5s8Sbj, which has a balance of approximately 830 bitcoin.

These addresses in total hold only approximately 10,909 bitcoins — around 38% of the amount of bitcoin that Sun claims to hold on the exchange.

The remainder of the bitcoin held at HTX is a wrapped Bitcoin product on Tron offered by Sun-owned Poloniex. Unfortunately, Poloniex refuses to disclose where it holds the collateral for these wrapped coins.

Read more: Is USDC preparing for a Justin Sun sanction?

Taken at his word, Sun is claiming that he is by far the largest trader still willing to use HTX. However, claiming he controls more currency than the entire exchange disclosed at its last proof of reserves raises additional concerns about the quantity and encumbrance of assets at HTX.

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The post Justin Sun has more bitcoin on HTX than the exchange held last month appeared first on Protos.

HTX, formerly Huobi, offers a ‘proof-of-reserves’ process meant to help assure users that it has the assets they need to be a solvent exchange. At one point, it even claimed that a third party would verify the proof-of-reserves process before eventually admitting, “After the release of the relevant announcement, we have connected with a third party, but then no third party can do this. So there are no third parties.”

Unfortunately, and perhaps contributing to the lack of third parties, it appears that HTX has been including ‘collateral’ for the USDD algorithmic stablecoin in its reports.

HTX provides a software tool that intends to make it possible for third parties to verify that HTX has the assets it’s supposed to. The ‘snapshot’ was most recently updated for the beginning of December and included the Tron address, TZ1SsapyhKNWaVLca6P2qgVzkHTdk6nkXa. 

This address is also listed as one of the “reserve accounts managed by the TRON DAO Reserve” for the USDD algorithmic stablecoin. This suggests that the assets in this address are being simultaneously counted as assets for HTX and collateral for USDD.

Further complicating this discussion is the claim that this account is “managed by the TRON DAO Reserve.” As we review the governance module for USDD, we can see only a single proposal that has ever been voted on, which doesn’t seem to provide for the collateral controlled by this DAO to be deposited at HTX.

stUSDT 

Other problems in the Sun ecosystem manifest in the HTX proof-of-reserves, including the incredible quantity of stUSDT (staked tethers) it controls. 

The vast majority of this Sun-controlled project ends up at HTX, with the remainder ending up in other addresses believed to be controlled by Sun. Furthermore, this raises additional concerns because approximately $402 million in stUSDT is included in the total balance of $475 million USDT on the platform, suggesting nearly 85% of all tethers on the platform are in this product.

The HTX Proof-of-Reserves suggests HTX holds approximately $475 million in assets against $470 million in user assets.

WBTC

Another problem in the HTX Proof-of-Reserves is the presence of WBTC on Tron in the proof-of-reserves. This product is offered by Sun-owned Poloniex; however, Poloniex previously told Protos it couldn’t disclose the Bitcoin addresses that hold the collateral for this token to us.

Nearly 45% of all Bitcoin on HTX is in this ‘wrapped’ form. Protos is unable to verify the backing. Currently, the proof-of-reserves suggests that HTX holds 21,842 BTC against 21,820 in user assets.

Read more: HTX hacked week after Poloniex — now Justin Sun only posts as AI

These various Sun-connected products make up a significant portion of HTX’s reserves but raise serious questions about the quality and quantity of assets held at this exchange. These concerns are only heightened following a recent hack.

Protos has reached out to HTX to clarify why these assets are included in the proof-of-reserves.

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The post Justin Sun stored USDD reserves at HTX for proof-of-reserves appeared first on Protos.

Former Binance chief Changpeng Zhao (CZ) and Tron founder Justin Sun have long maintained a well-documented bromance, lending frequent support to one another’s careers (and tokens). But with CZ currently in Seattle pleading guilty to various crimes and Binance agreeing to pay one of the largest fines in the history of finance, Sun’s behavior this week is curious at best.

Rumors are circulating that he might be in the process of his final exit while many wallets associated with him are involved in suspicious hacks. Indeed, blockchain observers are asking questions about mysterious, ongoing withdrawals of tens of millions of dollars worth of digital assets from Sun-championed services.

On November 10, someone stole approximately $114 million from Poloniex, which Sun recently purchased. A day earlier, Binance moved 3.9 billion USDT on Tron from its cold to hot wallets. Sun promised a $10 million bounty to the Poloniex hacker if they returned the funds by Friday, November 25. So far, no luck.

Not only that, today the operator of the Sun-championed HECO bridge withdrew over $86 million. Some people believe Sun directed those transfers and regardless of whether or not the act is nefarious, many are speculating that he’s directing assets to be liquidated into ETH and/or USDC.

In addition, for some reason, Tether has minted 1 billion USDT on Tron the day after his frequent ally CZ pleaded guilty to a litany of US crimes. Incidentally, an extra billion dollars will support liquidity on Sun’s blockchain.

Protos has been unable to verify that Sun is responsible for any of these hacks but on X (formerly Twitter), speculation is rampant.

Alongside this suspicious activity, and despite being in the midst of the collapse of the world’s largest crypto exchange, Sun is posting tone-deaf pre-recorded, AI-modified, YouTube videos.

Read more: Justin Sun in no hurry to tell China about HTX hack

Probably not the best use of his time, given that he’s currently defending himself in a major Securities and Exchange Commission (SEC) lawsuit. Commissioners allege that he and his companies Tron Foundation, BitTorrent Foundation, and Rainberry sold TRX and BTT tokens in illegal, unregistered securities offerings.

The SEC also alleges that Sun directed extensive wash trading of both tokens to make them appear more legitimate and desirable.

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The post HTX hacked week after Poloniex — now Justin Sun only posts as AI appeared first on Protos.

While Justin Sun immediately took to X to discuss the hack that occurred on his crypto exchange HTX (formerly Huobi), news of the loss has trickled into China through foreign media reporting. Sun hasn’t posted on his Weibo since the day before the hack, which resulted in a loss of about 5,000 ETH, transpired.

CoinDesk and other outlets reported on September 25 that Huobi had suffered an $8 million hack, with Sun promising that the amount was nothing when compared to the “$3 billion worth of assets held by (Huobi) users” and that “all funds are secure.”

It’s unclear why Sun hasn’t taken to Chinese social media to assuage the fears of users on the mainland, as according to SimilarWeb most traffic to the site appears to come from “other” jurisdictions, implying most customers are Chinese or Hong Kongers.

The site has also seen a dramatic rise in Russian users since the War in Ukraine began.

Since the most recent hack, the HT token — formerly the Huobi Token — has seen its price fall roughly 2%.

Read more: Justin Sun and Huobi play shell game with ownership

Hacked but still safe

While admitting to a loss of customer funds, Sun also stated that Huobi’s “multi-backup, multi-signature cold wallet system ensures 100% security.” Based on this hack alone, that’s clearly not true.

But this also isn’t the first time that Huobi has lost important customer assets: in July Protos reported that Huobi had accidentally given up two years’ worth of customer data in a breach. Despite this massive misstep, executives said, “The type of information leaked does not involve sensitive information and does not affect user accounts and fund security.”

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