Crypto analyst ErgoBTC has increase serious questions about the backing of TRC20 BTC tokens on the Tron network in a series of tweets. The analyst suggests that 60,000 of these tokens, currently parked on the JustLend protocol, appear to have never been backed. This implies an unbacked (non-existent) total value locked (TVL) of $1.8 billion, which is about 50% of the current TVL in the JustLend protocol.

The ErgoBTC tweets were in response to another tweet from a user named “alto | dollar.eth” who claimed to have found the wallet who backs the 60k ETH on Tron, but his current balance is zero. This raises more questions about the backing of TRC20 tokens on the Tron network.

In a typical centrally pegged scheme, the custodian advertises its reserve holdings for transparency and trust, as seen with wBTC. However, information about the custodian of the TRC-20 BTC backing is virtually non-existent.

The analyst conducted extensive research on the existence of the total 114k BTC on the BTC blockchain. The findings suggest that if these coins exist, they are not located at a dedicated address. Furthermore, a deeper dive into the 60k “mint” on August 21, 2022 revealed no signs of this activity on the BTC blockchain.

The investigation extended to major exchanges such as Poloniex, Huobi, and Binance, but none showed any signs of 60k BTC transactions. The TronDAO, which is not explicitly used to support TRC20 BTC, also showed no signs of related non-exchange addresses.

The analyst concludes that these findings are signs that the TRC20 BTC on Tron was, at best, temporarily and partially unsupported, and at worst, still partially supported (-60k of the reported 114k BTC). . The biggest hit appears to be a completely bogus JustLend TVL, about 50% of which is apparently unsupported.

The tweets also trace the path of the 60k BTC minted on Aug 21, 2022, which was sent to JustLend for a 600 million USDC loan. Half of this loan was paid off within two hours of creation, financed by an address attributed to Justin Sun. The remaining loan was funneled through another wallet, which it also received from J-Sun and deposited more than $1 billion into Circle in late September and early October.

The blockchain story ends here, but ErgoBTC notes that Huobi changed hands on Oct 10, 2022, a week after >1B USDC deposits to Circle. The analyst emphasizes that the absence of evidence is not evidence of absence, but none of this would be necessary if the custodian of TRC20 BTC were transparent.