Poloniex's Tron-Based WBTC Product Raises Red Flags Amidst Discount and Lack of Transparency

Poloniex, owned by Justin Sun, offers a wrapped bitcoin (WBTC) product on Tron currently trading at a substantial discount of over 20%. Amidst concerns about reserve transparency, Poloniex has not provided proof of reserves as promised and remains unclear about the location of bitcoin backing the WBTC product. Interconnections between Poloniex and Sun-advised HTX, which holds a significant portion of bitcoin within the WBTC on Tron product, raise questions about the nature of these relationships and potential exposure to risk.

Poloniex's Wrapped Bitcoin Product on Tron Raises Concerns Amidst Discount and Lack of Transparency

Poloniex, a cryptocurrency exchange controlled by the prominent figure Justin Sun, has come under scrutiny for its wrapped bitcoin (WBTC) product on the Tron blockchain. The product, known as WBTC on Tron, has been trading at a substantial discount of over 20% on Poloniex in recent times.

The market for WBTC on Tron has exhibited minimal activity, with virtually no trading volume over the past day. Moreover, only 79% of the WBTC in circulation on Tron has been exchanged against bitcoin itself.

Poloniex has not yet fulfilled its commitment to provide Protos, a reputable media outlet, with a "proof-of-reserves" for the WBTC product. The exchange has also remained tight-lipped about the location of the bitcoin reserves backing the WBTC on Tron offering.

Protos has repeatedly reached out to Poloniex in an attempt to ascertain the status of the product's reserves, the timeline for the promised proof-of-reserves, and the nature of the relationship between Sun-owned Poloniex and Sun-advised HTX.

The final aspect holds particular significance, as a substantial portion of the bitcoin held by HTX, formerly known as Huobi, is part of the WBTC on Tron product offered by Poloniex. According to HTX's most recent proof-of-reserves, WBTC on Tron constitutes over half of the bitcoins held by the exchange, representing more than 14,400 bitcoins valued at approximately $900 million.

Additional ties between Poloniex and HTX have also been noted. For instance, the Poloniex support website hosts the "Huobi Platform User Agreement" page, indicating a possible connection between the two platforms.

Furthermore, the WBTC on Tron offering is not isolated to HTX and Poloniex. JustLend, another Sun-affiliated entity, holds approximately 92,000 bitcoins valued at roughly $5.6 billion in WBTC on Tron.

The significant discount in the market, coupled with the issuer's reluctance to disclose the location of the product's reserves, raises concerns about the overall stability of this WBTC offering and its potential impact on the broader cryptocurrency ecosystem.

As of the date of this report, Poloniex has not provided a comprehensive response to Protos' inquiries. The situation remains under close scrutiny, and updates will be provided as they become available.