- Huobi saw a record $64 million in outflows over the weekend.
- The Outflows followed reports that the exchange’s executives had been arrested in China.
- An Angel investor has also pointed to inconsistencies in Huobi’s reserves.
Huobi customers withdrew $64 million over the weekend due to worries about the cryptocurrency exchange company going bankrupt and rumours that Chinese authorities were looking into their management. As speculation persisted, the total value locked (TVL) on the exchange decreased to $2.5 billion from $3.09 billion over the past month.
All these started on August 4 after Chinese authorities allegedly detained Huobi’s top executives. It was reported that the arrests were the result of an investigation into the exchange’s ties to betting websites.
Huobi woes
The rules governing cryptocurrency trading platforms appear to be getting stricter in China. Also, uncertainty exists regarding whether the recent resignation of one of the exchange’s senior executives was related to the ongoing investigations in China.
However, Huobi’s social media manager refuted the allegations and stated that the exchange is “currently doing well.”
But according to angel investor and fintech executive Adam Cochran, Huobi is allegedly having financial issues. Adam Cochran has specifically pointed to some inconsistencies in the exchange’s Tether (USDT) balances.
11/16
So users *think* they have balances of $631M in Huobi, but there is only $90M there.
The rest Justin Sun is using to prop up his other defi apps, and paying a yield on it to get users to deposit more into Huobi.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 5, 2023
Huobi’s most recent “Merkle Tree Audit” claims that they hold $630 million in USDT, but on-chain data reveals that as of August 5, they had less than $90 million in assets. This suggests that Huobi might not be able to pay its debts, according to Cochran.
Justin Sun’s response
Justin Sun, the CEO of the Huobi Exchange, has responded to the allegations that the crypto exchange is about to fail.
Huobi in a tweet has also termed the circulating information as a FUD. It said:
The past two days have seen people getting concerned due to the spreading FUD. We want to take a second to respond in the open, with absolute sincerity and clarity