The Huobi crypto exchange has stirred stress among members of the crypto industry, many of whom now speculate that the exchange could be looking at an insolvency situation. A number of factors have contributed to the rumours that indicate that the exchange is under grave financial distress. This includes millions worth of outflows from the exchange in recent days, leading to a significant drip in the total value locked (TVL) status of the exchange.
Over the weekend, over $64 million (roughly Rs. 530 crore) was reportedly recorded in outflows from Huobi.
This brought the TVL in Huobi down from $3.9 billion (roughly Rs. 32,265 crore) recorded in July to $2.5 billion (roughly Rs. 20,683 crore), showed data by DeFiLlama on Monday.
The massive outflows from Huobi were instigated after rumours of the exchange’s leadership having been questioned in China surfaced around August 4. Chinese authorities reportedly arrested executives of Huobi as well as Tron, alleging that the crypto projects were involved with gambling initiatives.
As per crypto analyst Adam Cochran, China is 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 facing probes by the Chinese police.
Cochran posted a detailed thread on X, formerly Twitter, highlighting Huobi’s current business status.
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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
Huobi’s social media head declined the rumours, but her claims were challenged again by Cochran, who claimed Tron executives have confirmed the investigation rumours.
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 said anything about the subject as yet.
Huobi’s reported insolvency situation has caused stress in the crypto sector as the last time a crypto exchange (FTX) collapsed, it resulted in the wipeout of over $200 billion (roughly Rs. 16,54,572 crore), shaking up the global crypto community.
