Huobi Cryptocurrency Exchange Facing Significant Outflows

The Huobi cryptocurrency exchange has experienced a substantial outflow of funds, totaling an astonishing $64 million over the past weekend. This event is part of a continuous decline in the total value locked (TVL) on the exchange, which has now dropped from $3 billion a month ago to $2.5 billion, according to DeFiLlama.

The situation has sparked concerns about the financial stability of Huobi, with Adam Cochran, a fintech executive, angel investor, and renowned crypto Twitter analyst, raising eyebrows by suggesting that Huobi may be facing insolvency. Cochran pointed out that Binance, a global crypto heavyweight, has been engaged in a bulk sale of Tether (USDT), one of the leading stablecoins in the market.

As Cochran stated on Twitter, the possible reason behind this move could be Huobi’s financial troubles. Cochran further mentioned some unusual balance shifts at Huobi over the past month, connecting them to the recent rumors of police questioning Huobi executives and personnel from Tron, a blockchain platform founded by crypto entrepreneur Justin Sun.

Cochran’s claims gained attention as he shared a list of names allegedly detained, including the heads of various departments reporting to Tron CTO Marus Zhong. However, the tweet containing the list was later deleted.

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Huobi’s Assets and Allegations of Mismanagement

Cochran went on to outline his understanding of Huobi’s holdings. He alleged that the exchange only holds $90 million in assets when combining the value of USDT and USDC. However, Huobi’s own “Merkle Tree Audit” suggests that Huobi users have a total of $631 million in USDT held, creating a significant discrepancy.

Cochran speculated that these missing funds might be utilized to support the yields of Tron, Poloniex, and other DeFi apps operated by Justin Sun. However, Cochran noted that even when considering these amounts, Sun appears to have only about half of the total obligations related to Huobi.

The head of social media at Huobi responded to the allegations, denying any involvement of law enforcement and emphasizing that all operations at the exchange have been normal. Cochran, however, stood firm on his claims, stating that his source is a senior executive at Tron with firsthand knowledge of the investigation.

This year has proven challenging for Huobi, with several setbacks including staff layoffs, an order to cease operations in Malaysia, and the departure of at least one C-level executive, as reported by Cointelegraph.