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Will stUSDT be the Final Nail in the Coffin of Justin Sun's Crypto Empire?

stUSDT recently crossed the $1 billion TVL threshold, but rather than excitement, the phenomenal growth of Justin Sun’s latest DeFi project intensified concerns.

Justin Sun stUSDT Trin

Several projects associated with crypto entrepreneur Justin Sun saw their value grow following a series of million-dollar movements of funds made last Friday. As accounts are traced back to the crypto entrepreneur and the high exposure of multiple projects to the cryptic stUSDT is revealed, Sun’s latest project could potentially become his last.

On September 15, an account associated with the CEO of Tron minted $815 million in TUSD, burnt shortly after. At the same time, $865 million of stUSDT was minted and went straight into JustLend.

These movements, connected to the accounts of the crypto billionaire, led to Staked USDT (stUSDT) surpassing the $1 billion threshold and almost doubling in size, according to data by DeFi Lama.

stUSDT is a product claiming to give users over 4% yield on staked Tether from investments in real-world assets (RWA). Heavily promoted by Sun since its launch in early July, the project has been thriving while much of the Defi world is going through somewhat of a lull.

The success of the product, however, is tainted by its lack of transparency: the decentralized organization supposedly responsible for governing it is nowhere to be found, while no information has so far been provided regarding its real-world investments. According to Bloomberg, these uncertainties led institutional clients to withdraw most of their assets from Huobi shortly after the staked Tether project launch.

Huobi, one of the largest crypto exchanges, is another of Sun’s projects. While claiming to just be an advisor, Sun has previously stepped in to help stabilize the exchange in times of FUD (fear, uncertainty, and doubt). Now, reserves associated with the CEO of Tron represent almost 60% of all the exchange’s tokens, with stUSDT being the 4th largest (14.28%), despite the product’s fairly recent launch.

In contrast, USDT reserves on Huobi fell dramatically, raising concerns that the exchange is transforming users’ stablecoin funds into stUSDT through Huobi Earn, a platform where users can deposit their crypto for Huobi to invest on their behalf.

It is not only with Huobi that stUSDT is raising concerns. Friday's transactions led JustLend, a popular peer-to-peer lending platform on the Tron network, to witness a sudden 17% increase in total value locked (TVL) to $4.57 billion. However, as $1.5 billion of it belongs to Sun, the vast majority of which is wrapped stUSDT, users are worried about what might happen to JustLend if the staked tokens project defaults.

Over the years, stories of Sun's unconventional procedures have been a source of both amusement and concern. But as the man Verge once called “more audacious than his reputation” further interconnects his latest project with previous ones, the future of his empire potentially looks increasingly bleak.