This article covers Justin Sun’s response to rumors about leveraged futures positions from HTX being liquidated during a sharp market downturn. It also explores the broader market context and reactions to these events.
Points
- Justin Sun denies HTX liquidation rumors.
- Sun promises $1 billion to combat FUD and provide liquidity.
- Speculation about large leveraged positions on HTX.
- Market downturn linked to the unwinding of the yen carry trade.
- Bitcoin and crypto markets see significant losses.
Justin Sun, the founder of Tron and Huobi （HTX）, has firmly denied rumors that leveraged futures positions from HTX were liquidated during the recent sharp market downturn. He asserted that HTX “rarely” engages in leveraged trading. In a bid to counteract the fear, uncertainty, and doubt （FUD） surrounding these rumors, Sun announced a $1 billion fund aimed at investment and liquidity support. However, specifics about this fund remain unclear.
Cointelegraph reached out to Sun for further clarification but did not receive a response by the time of publication.
Weeks of Rumors Resurface
The speculation regarding large leveraged positions on HTX initially surfaced on July 12, when CryptoQuant founder Ki Young Ju highlighted a $515 million long Bitcoin futures trade open on the platform. Ju suggested that staked Tether stablecoins （stUSDT） were likely used as collateral, pointing out that HTX’s $24 million Tether stablecoin reserve remained untouched. When Ju contacted Sun and the HTX team for clarity, Sun denied any involvement in the large leveraged trade, expressing frustration and attributing the position to HTX clients who are allowed to use stUSDT and aEthUSDT as collateral.
Sun also declined to disclose who was responsible for the trade, citing HTX’s policy of not commenting on or providing information about client trades.
The Market Turmoil
The recent market turmoil has been significantly influenced by the unwinding of the “yen carry trade,” a strategy involving taking out low-interest yen loans to purchase dollar-denominated assets. The Bank of Japan’s sudden interest rate hike from 0.1% to 0.25% rendered many of these loans unprofitable, prompting investors to sell off assets to cover their positions. This sell-off contributed to over $1 billion being wiped from the crypto markets, with Bitcoin’s price briefly crashing below $50,000, hitting a low of approximately $49,000 on August 5.
Institutional investors also reacted by panic selling, with weekly inflow data showing $528 million in outflows from crypto investment vehicles amid fears of a looming global recession.
Magazine: How crypto bots are ruining crypto — including auto memecoin rug pulls.