Over the last weekend between August 5-6, crypto exchange Huobi witnessed massive outflows worth $64 million amid rumors of Chinese authorities investigating its executives and the fears of possible insolvency.
Amid the ongoing rumors, the total value locked (TVL) on the exchange dropped significantly to $2.5 billion, from $3.09 billion last month. There were rumors that the leaders of the exchange were arrested in China on August 4. The rumors suggested that this was because of an investigation related to the exchange’s involvement with gambling platforms.
It seems that authorities in China are getting stricter with cryptocurrency exchanges. Also, one top executive has recently left the exchange, but it’s not clear if it’s connected to the investigations in China.
However, Huobi’s head of social media has called the rumors untrue adding that the exchange is “currently doing well”.
The source has been verified as a senior executive at Tron who has first hand knowledge of the investigation and has been at Tron for many years.
Whether you’ve been informed or not, your colleagues are currently under criminal investigation.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 6, 2023
There are allegations that the crypto exchange may be facing financial problems. Fintech executive and angel investor Adam Cochran pointed out some inconsistencies in the exchange’s Tether (USDT) holdings.
According to on-chain data, Huobi had less than $90 million of assets on August 5, but their latest ‘Merkle Tree Audit’ claims they have $630 million in USDT held. Cochran suggests that this means Huobi could be insolvent, meaning they might not have enough funds to cover their obligations.
Justin Sun Responds On Huobi Insolvency
Huobi exchange chief Justin Sun has responded to the rumors regarding the insolvency of the exchange. In his recent message on Twitter, Sun noted: “Ignore FUD, keep building! #TRON and #Huobi will thrive through continuous development. Trust in our vision and community efforts for a stronger future. Perseverance guarantees success!”
On the other hand, Huobi has been closely following all the crypto-friendly developments in Hong Kong, which has recently introduced a crypto framework for companies to operate in the region. Earlier this year in February 2023, Huobi also applied for a crypto trading license in Hong Kong.
In the past, there have been several news of troubles at the Huobi exchange. However, Sun and his team have continued to communicate in every instance,in order to maintain transparency.
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