HTX Reserve Funds Were Moved to Poloniex-Labeled Wallets After Sanctions, Report Says

HTX began changing how it presents and stores reserve assets after sanctions from the European Union and the UK’s Foreign, Commonwealth & Development Office, according to reporting that traces reserve movements on-chain. The exchange also updated its proof-of-reserves to include a new “ThirdParty” category for assets it says are held by outside custodians.

TRM Labs said HTX started rotating addresses quickly in a way that could make its holdings harder to track. Separate tracing of one disclosed reserve wallet by Protos found that a large stETH balance listed in HTX’s May proof-of-reserves was later sent through a chain of wallets ending at addresses labeled on Etherscan as belonging to Poloniex.

Reserve disclosure changed after sanctions

Before the changes, HTX’s proof-of-reserves included a set of specific wallet addresses. After the sanctions, TRM Labs said the exchange began cycling through addresses on-chain and shifted part of its reserve reporting into an undisclosed “ThirdParty” bucket.

HTX has said users can verify those funds by contacting the custodians involved. However, the report says HTX did not answer requests asking who those custodians are. TRM’s view, as cited in the report, is that the wallet rotation may be intended to stay ahead of sanctions screening.

A traced stETH balance moved through several wallets

Protos followed one asset balance from HTX’s May 1 proof-of-reserves. That filing listed 71,853.22 stETH, worth about $135 million, in the address 0x18709e89bd403f470088abdacebe86cc60dda12e.

According to the on-chain trail described in the report, those funds moved on May 30 to 0x7C103bbAE0DA51AE929dE97A98633668ddE80d04, then to 0x8fCA4adE3a517133fF23ca55CdAea29C78C990b8, which Etherscan labels as Poloniex 7. From there, the assets were sent to 0x29065a4C1f2F20d1E263930088890d6F49Fe715a, labeled Poloniex 10, and then to 0x176F3DAb24a159341c0509bB36B833E7fdd0a132, labeled Poloniex 9.

Why the wallet labels matter

The final destination in that sequence had previously been labeled “Justin Sun 4” on Etherscan before later being marked as a Poloniex address, according to the report. Based on that path, Protos said the transfers suggest HTX funds were moved into wallets associated with Poloniex.

The report characterizes this as evidence that HTX reserve assets may have been commingled with Poloniex reserves. That conclusion is based on address labels and transfer history described in the article, rather than a public confirmation from either exchange.

Broader questions around custody

The report says HTX has often relied on Poloniex to hold assets, and that more than half of HTX’s BTC has been held in tokenized form by Poloniex. It also says Poloniex has not disclosed the addresses where that bitcoin is kept.

The next confirmed point of scrutiny is therefore custody transparency. HTX’s current proof-of-reserves presentation includes third-party-held assets, but the cited reporting says the identities of those custodians and the wallet addresses behind some holdings remain undisclosed.

Source: protos.com