Cambodia-based firm behind the biggest illicit marketplace Huione Group, has been accused of misleading CertiK during the audit of its stablecoin. The group was said to have tricked the blockchain security platform into providing a favorable audit during its USDH audit.
According to a post made by CertiK co-founder Ronghui Gu on X, the company was approached by a third party platform that refused to reveal that the project had links to the illicit marketplace.
CertiK said it was blindsided in the USDH audit
According to reports, the Huione Group was revealed as the company behind the Huione Guarantee marketplace, one of the biggest that provides services to illegal actors. The platform, which operates in Southeast Asia, has already processed transactions worth $24 billion.
Last year, the marketplace launched its USDH stablecoin, which it claimed was pegged to the dollar and would help users evade transaction freeze attached to other stablecoins like USDT. However, experts in the market revealed that the group launched the token to aid their money laundering activities.
After the launch, the company contacted CertiK to help audit the stablecoin, with the audit revealing about 12 issues with the token. The token had three major issues, two medium, three minor ones, and four informational issues. The report noted that six of the issues were already resolved, with one partially solved and another five just acknowledged.
While the coin was given a security score of 30%, the platform ran with it, using it to prove its legitimacy. However, information coming to light is now accusing Huione Group of misrepresenting or concealing information when the blockchain security firm carried out its audit. The company did this to gain a favorable assessment, using it as a proof of legitimacy.
According to Ghu, the company could’ve done a deeper investigation after it was contacted by a third party for the job. The co-founder admitted to not doing enough to protect the public while carrying out the audit. “We agree that deeper due diligence and extra alerts would’ve helped,” Ghu said. Meanwhile, Huione Guarantee has been trying to prove it has no ties to the Huione Group, lending credibility to the allegations.
Huione Group job puts CertiK in a tough spot
This case summarizes the challenges related to auditing crypto projects in the industry. While smart contract audits provide legitimacy for the technical aspects, they fail to recognize the compliance of the firms related to the project. This allows bad actors to take advantage of the general public using a tested audit as a smokescreen.
On-chain sleuth Tayvano_ took to his X account and said, “A literal multi-billion dollar money laundering operation paid CertiK to stamp approval of their new money laundering contract.” Other people commenting on the issue also discussed the need to include the legitimacy of the companies backing the projects as full proof that the project is safe. However, there are chances that the blowback could affect CertiK, with the audit meaning that they are providing services to scammers for cash.