The Huobi crypto exchange has sparked concern within the crypto industry, with many speculating that the exchange may be facing insolvency. Several factors contribute to these rumors, suggesting that the exchange is in serious financial distress. This includes significant outflows from the exchange in recent days, leading to a drastic drop in the total value locked (TVL) of the exchange.
Over the weekend, it was reported that over $64 million (roughly Rs. 530 crore) was withdrawn from Huobi. As a result, the TVL in Huobi decreased from $3.9 billion (roughly Rs. 32,265 crore) in July to $2.5 billion (roughly Rs. 20,683 crore) according to data from DeFiLlama on Monday.
The substantial outflows from Huobi were triggered by rumors that the exchange’s leadership in China was being questioned, which emerged around August 4. Chinese authorities supposedly arrested executives from Huobi and Tron, alleging their involvement in gambling initiatives.
According to crypto analyst Adam Cochran, China is currently investigating the operations of Huobi and Tron. Fai Wang, the Head of HR at Huobi, and Wang Huanye, the Head of Server Operations at the firm, are under investigation by the Chinese police.
Cochran posted a detailed thread on X, formerly known as Twitter, highlighting the current situation at Huobi.
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So why is Tether selling off?
Likely Huobi insolvency.
-Binance started selling off USDT in bulk.
-We found out that Huobi execs (and Tron personnel questioned by police)
-This is not long after Sun’s stUSDT launch
-And weird balance shifts at Huobi in the last month pic.twitter.com/f3HViYS93a— Adam Cochran (adamscochran.eth) (@adamscochran) August 5, 2023
The head of Huobi’s social media department denied the rumors, but Cochran challenged her claims by stating that Tron executives have confirmed the investigation rumors.
This was already confirmed to me directly, by a senior executive from the Tron team.
They confirmed team members were under investigation due to actions related to Huobi.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 6, 2023
“But Huobi’s own “Merkle Tree Audit” still lists that Huobi users have $630M of USDT held and a wallet balance of $631 (roughly Rs. 5,220 crore) USDT. Of course, this stopped updating last month. So users think they have balances of $631 million (roughly Rs. 5,220 crore) in Huobi, but there is only $90 million (roughly Rs. 744 crore) there,” Cochran noted in his threads.
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When Binance heard that Huobi/Tron employees were being investigated in relation to actions at Huobi, they started slamming the 3CRV USDT sell into DAI to mitigate their risk.
Because Huobi is deeply insolvent.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 5, 2023
Huobi has not yet commented on the matter.
The reported insolvency situation at Huobi has caused concern in the crypto sector, as the collapse of a crypto exchange (FTX) in the past resulted in the loss of over $200 billion (roughly Rs. 16,54,572 crore), greatly impacting the global crypto community.
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Deepak Sen is a tech enthusiast who covers the latest technological innovations, from AI to consumer gadgets. His articles provide readers with a glimpse into the ever-evolving world of technology.
