ErgoBTC Raises Questions about Backing of TRC20 BTC Tokens on Tron Network
Crypto analyst ErgoBTC has questioned the backing of TRC20 BTC tokens on the Tron network. The analyst suggests that 60,000 of these tokens in the JustLend protocol appear to be unbacked. This would mean an unbacked Total Value Locked (TVL) of $1.8 billion, which is approximately 50% of the current TVL in JustLend.
Key Points:
- 60,000 TRC20 BTC tokens in JustLend protocol are unbacked
- Custodian information for TRC20 BTC backing is practically non-existent
- Investigation found no signs of the 60k BTC minting activity on the BTC blockchain
- No evidence of the 60k BTC transactions on major exchanges and TronDAO
- TRC20 BTC on Tron is potentially partially unbacked, impacting JustLend TVL
The investigation also traced the path of the 60k BTC minted in August 2022. Half of this loan was repaid within two hours, funded by an address associated with Justin Sun. The remaining loan was deposited to Circle. ErgoBTC highlights the change in ownership of Huobi after the >1B USDC deposits to Circle.
In conclusion, the findings suggest that the TRC20 BTC tokens on Tron may be unbacked or only partially backed. This raises concerns about the transparency and trustworthiness of the custodian. The impact is a potentially fake JustLend TVL, with approximately 50% of it being unbacked.
Hot Take:
The lack of transparency and evidence regarding the backing of TRC20 BTC tokens on the Tron network raises serious questions about the integrity of the system. Crypto investors and users should exercise caution when dealing with these tokens and consider the potential risks involved.
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