Huobi faces fund outflow amid insolvency rumors


From August 5 to 6, Huobi crypto exchange experienced a major outflow due to rumors of alleged bankruptcy, as a result of its TVL decreased by almost $54 million.

Cryptocurrency Analyst Adam Cochran published a post on X (formerly Twitter), which was subsequently deleted. He claimed that some members of the leadership of Huobi and Tron were interrogated by the Chinese police.

Cochran even published a list of names of people who could be arrested.

After conducting his own audit of the exchange, the expert came to the conclusion that there are about $630 million in total on the balances of users. At the same time, he estimated the platform’s reserves at only $90 million.

The missing funds, as suggested by Cochran, are being used to support the profitability of Tron, Poloniex and other DeFi applications controlled by Justin Sun.

In November 2022, the media reported on a possible merger between Huobi and Poloniex, which Sun and a group of investors bought in 2019. The entrepreneur denied the rumors, but did not rule out a similar development of events in the future. The platforms have established a strategic partnership.

In addition, the Tether stablecoin has been in a light depeg with the US dollar for about a week now. According to Cochran, the Binance exchange has already started a massive USDT sell-off.

It is likely that the company is simply promoting its own “stablecoins”, but the management may be aware of Huobi’s problems and thus try to minimize the risks, the researcher believes.

“[Binance] wants to crash USDT to push [стейблкоины]which they can control and profit from. They understand that Sun does not have the USDT he claims, and if users find out, they can perform a mass reset,” Cochran added.

At the same time, balance reports introduced after the collapse of FTX were not published by the trading platform for more than a month, the analyst noted.

Representative of Huobi named this information is pure hearsay. She assured that the exchange is operating as usual.

“I believe that further investigation into the source of the information is necessary and to avoid FUD‘ she wrote.

However, the expert continued to stand his ground. He stated that the source is “a senior Tron executive who has first-hand knowledge of the investigation and has been with the company for many years.”

Recall that in early August, Justin Sun reported that over the past four quarters, Huobi has not shown a net profit. The head expects to break even in October-December.

Earlier, white hacker Aaron Phillips drew attention to the data leakage of platform users. The company has already fixed the problem, he said, but the loophole has been active since 2021.

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