Crypto analyst Adam Cochran has released a Twitter thread alleging Huobi and Tron’s executives were arrested in China. According to Techub News, he says, credible sources have disclosed that the Chinese police have taken at least three Huobi encryption exchange executives into custody for investigation involving areas like manpower, R&D, and finance.
The individuals allegedly apprehended include Wan Ming, who holds the position of Tron’s head of product; Rain Ren, Tron’s head of chain tech; Fai Wang, the Head of HR at Huobi; Wang Huanye, the Head of Server Operations at Huobi, and Zhang Da, the DevOps Lead. These teams reportedly report to Marus Zhong, the CTO at Tron.
Responding to the situation, some employees stated they received an urgent notice advising them to leave the country immediately. Notably, there have been previous reports about Chinese authorities investigating several CTO, CHO, and other executives in exchange for their alleged involvement in operating a casino.
Huobi executive allegedly running shell companies
Cochran revealed that the recent news about Huobi’s executives being taken away for an investigation follows the disclosure of their involvement in running Chinese shell companies under the names of other family members. Considering these developments, Cochran remarked that it wouldn’t be surprising if Justin Sun, the founder of Tron, faced consequences in the future.
Cochran highlighted that Huobi recently experienced a significant surge in its outflows of USD assets. That supports the claim of some executives warning them to leave the country. Additionally, he noted a substantial increase in the off-ramping of USDT, with a sudden withdrawal of $36 million in USDT occurring within the last 48 hours, coinciding with the time of the mentioned arrest of the executives.
He further pointed out that this situation aligns with the pattern observed in the recent issues with Multichain, where their team encountered similar problems with executives being seized and assets seemingly taken, in addition to past instances involving Chinese exchanges and traditional businesses. While it’s essential not to accept rumors at face value, he added that it is worth considering them and adjusting one’s risk accordingly.
Regarding Huobi users, Cochran mentioned that he usually would warn them to move their assets off the platform. However, he noted that Justin Sun had already ensured that none of their assets were left on Huobi.
Sun’s lawsuits and USDT transactions
In March, the Securities and Exchange Commission (SEC) filed charges against Justin Sun and three of his companies. The accusations revolved around the unlawful offering and sale of crypto asset securities, specifically Tronix (TRX) and BitTorrent (BTT). In addition, the SEC claimed that Sun and his companies had manipulated the TRX secondary market by wash trading.
Furthermore, they were accused of orchestrating a deceptive scheme to pay celebrities for promoting TRX and BTT without disclosing their compensation. This misleading tactic aimed to portray these celebrities as genuine fans and supporters of cryptocurrencies when, in reality, they were paid advertisers.
Cochran earlier called a notice to transactions carried out by Sun’s address on Tron, including burning $62 million worth of TUSD, removing $50 million from Huobi, and the deposit of $50 million on Bitfinex. The most concerning aspect was Sun’s apparent burning of $50 million TUSD, raising suspicions that it might be an attempt to temporarily create a “fake” balance that is not adequately backed, possibly to “snapshot or unwind” debt.
Moreover, Cochran pointed out that Sun seemed to be utilizing exchanges like Poloniex and Huobi as his “piggy” banks, borrowing substantial amounts against Huobi assets, which were then invested in JustLend, a lending platform on the Tron.
These transactions raised questions about Sun’s intentions and the potential implications of his actions on the wider cryptocurrency market. Cochran particularly expressed worry that Sun’s apparent “manipulation” of TUSD could give a false impression of increased market liquidity and potentially lead to price manipulation. These concerns cast doubt on Sun’s practices and raised alarm about the overall stability and integrity of the cryptocurrency market.
