Justin Sun, the founder of Tron and Huobi (HTX), has rebutted allegations suggesting that leveraged futures positions at HTX were liquidated during the recent sharp downturn in the market, asserting that HTX “rarely” engages in leveraged trading.
Sun’s Response to Market Speculations
Following the rumors, Sun announced his plan to allocate $1 billion to “combat fear, uncertainty, and doubt, invest more, and provide liquidity.” However, specifics about the utilization of this substantial fund remain vague beyond his initial statement.
Despite attempts by Cointelegraph to gain further insights from Sun, no additional information was forthcoming by the publication deadline.
Background of Leveraged Trading Rumors
Speculations regarding significant leveraged positions on HTX resurfaced on July 12 after CryptoQuant’s founder, Ki Young Ju, spotlighted a $515-million long Bitcoin futures trade on the platform. Analysis suggested that staked Tether stablecoins (stUSDT) might have been used as collateral for the trade, while HTX’s $24-million Tether stablecoin USDT reserve appeared unaffected.
When questioned, Sun refuted any personal involvement with the large leveraged position, expressing frustration over the allegations. He explained that it was HTX clients, who are permitted to use stUSDT and aEthUSDT as collateral, who likely initiated the substantial futures position. Ju also noted that Sun declined to reveal the identity of the trader, adhering to HTX’s customer privacy policies.
| Date | Event |
|---|---|
| July 12 | $515-million Bitcoin futures trade highlighted |
| Ongoing | Sun denies personal involvement; attributes trade to clients |
| Recent | Sun announces $1 billion fund to stabilize market concerns |
The turmoil in the market can be largely attributed to the unwinding of the “yen carry trade,” where investors took out low-interest yen-denominated loans to buy dollar-denominated assets. A recent slight interest rate hike by the Bank of Japan from 0.1% to 0.25% exacerbated the situation, placing many of these loans at a disadvantage as the USD cost of servicing these debts rose.
This financial shift prompted a massive sell-off as investors scrambled to mitigate losses, fearing further rate increases from Japan’s central bank. The crypto market was particularly affected, with over $1 billion lost as Bitcoin’s price plunged below $50,000, bottoming out around $49,000 on August 5.
The market instability also triggered panic selling among institutional investors, with the following week showing significant capital flight from crypto investments:
- Crypto investment vehicles witnessed substantial outflows, with data indicating a $528 million exit during the market downturn.
- Potential global recession fears further fueled the outflows, compounding the financial instability in the crypto sector.
As the crypto and financial markets navigate through these turbulent times, the role of platform leaders like Justin Sun becomes crucial in instilling confidence and stability. While the exact impacts of Sun’s proposed $1 billion fund remain to be seen, its potential to mitigate market fears and stabilize investor sentiment is significant. The unfolding dynamics will likely continue to influence the crypto market’s trajectory in the near future.
