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HTX, the Justin Sun-owned cryptocurrency exchange, has an unusual set of reserves that raise serious concerns about its management and how it uses user funds.

Indeed, according to Protos’ analysis, many of the HTX’s assets aren’t what users would expect, but are often either strange tokenized variants or many are lent out and not actually stored on the exchange.

For example, as of the beginning of December, there were supposedly more than 20,000 bitcoins (BTC) worth $1.8 billion on the exchange.

However, the majority of this wasn’t native BTC. Instead, it was what HTX refers to as BTCTRC20.

This is a tokenized version of BTC that’s issued on the Sun-founded Tron blockchain. However, this isn’t a version that people use frequently, like Sun-advised Wrapped Bitcoin.

Instead, this version is a Sun special issued by Poloniex.

What makes this massive portion of the reserves worth nearly a billion dollars even more problematic is that we don’t know where the BTC meant to collateralize it is stored.

Presumably, it’s held by Poloniex, but Poloniex itself was unwilling to disclose to Protos where the collateral for the token is held.

Furthermore, the token would make up approximately 98% of all BTC disclosed in the Poloniex proof of reserves, leaving very little for Poloniex customers.

However, BTC isn’t the only asset with problems. Indeed, the situation with Ethereum is also dire.

At the beginning of December, less than 9% of all ether (ETH) that was supposed to be in the reserves was actually native ETH.

Every month since December 2024, the native ETH has been a minority, with the remainder being either lent on Aave or in the form of staked ETH from Lido.

Adding to this strangeness, the total amount of ETH on exchange has fallen approximately 70% since its peak in May of last year.