​Chinese OTC traders have suspended acceptance of USDT on the TRON blockchain

What’s new? Analyst Colin Wu has reported that some over-the-counter (OTC) traders in the Chinese market no longer accept the Tether (USDT) stablecoin of the TRC-20 standard (TRON blockchain). According to Wu, traders require users to change the asset to USDT of the ERC-20 standard (Ethereum blockchain) before trading.

Recently, some OTC merchants in the Chinese market said that they no longer accept TRC20 USDT, and need users to go to the exchange to exchange for ERC20 USDT before trading. It is suspected to be related to the Justin Sun and TRON FUD spread by the community. Exclusive— Wu Blockchain (@WuBlockchain) January 12, 2023

What is the reason for the refusal? According to the analyst, the refusal to accept USDT on the TRON network may be due to the fact that the asset does not comply with anti-money laundering (AML) compliance requirements of tools such as Chainalysis. Accordingly, the asset has been rejected by institutions and traders in the OTC market. In particular, Matrixport, a platform founded by Jihan Wu, has suspended USDT TRC-20 deposits and withdrawals since January 9 without explanation.

Chainalysis is a software and services developer for government agencies, exchanges, financial institutions, and cybersecurity companies. Chainalysis’ solutions help to investigate and solve crimes in the field of cryptocurrencies.

Traders’ decision to refuse to accept USDT coincided with numerous rumors surrounding TRON founder Justin Sun and his crypto exchange Huobi. For example, Colin Wu previously reported on the forced transfer of Huobi employees’ salaries into USDT and USDC under threat of dismissal.

In another publication, Wu reported that Huobi does not plan to pay employees bonuses at the end of the year, and will cut salaries for top executives and reduce staff by 600–800 employees. Later, Sun confirmed the information about the plans to lay off about 20% of employees, adding that the “structural adjustment” will be completed by the end of the first quarter.

Since the collapse of the FTX crypto exchange, the daily volume of transfers in USDC five times surpassed USDT, although the market capitalization of the asset is less than $22 billion.