- Huobi’s total value locked (TVL) drops to $2.5 billion amid rumors of solvency issues, investigations by Chinese authorities, and substantial outflows of $64 million within two days.
- Claims suggest discrepancies between Huobi’s stated Tether holdings and on-chain data, fostering suspicion about the exchange’s financial health.
In the highly dynamic world of cryptocurrency, storm clouds are gathering over one of its major players. Huobi, the cryptocurrency exchange, finds itself in a vortex of unsettling rumors and accusations. These encompass a gamut of issues from alleged insolvency, investigations by Chinese authorities, leadership arrests, and significant capital outflows, casting a pall of uncertainty on the crypto market.
Thanks for the update, I believe there needs to be more investigation into the information source and avoid FUD.
— 三三 💙 Huobi (@33Huobi) August 6, 2023
Ongoing Outflows and a Steep Drop in TVL
Within a span of two days, between August 5th and 6th, Huobi has witnessed outflows amounting to a staggering $64 million. This sudden hemorrhage of capital has resulted in the exchange’s total value locked (TVL) plummeting to $2.5 billion, down significantly from its earlier valuation of $3.09 billion on July 6th.
The cause of this substantial capital drain is speculated to be ongoing rumors questioning Huobi’s solvency, as well as alleged investigations by Chinese authorities into the company’s dealings. As authorities reportedly tighten their control over cryptocurrency exchanges in mainland China, the whispers of arrests within the exchange’s leadership have begun to surface, adding fuel to the existing fire.
Muddying the Waters: Solvency Speculations and Tether Troubles
The solvency storm brewing around Huobi finds its roots in a series of posts by Fintech executive and angel investor, Adam Cochran. Cochran has drawn attention to alleged inconsistencies in Huobi’s Tether holdings, as stated in their latest “Merkle Tree Audit”. The audit report contends that Huobi users have $630 million in USDT held with a corresponding wallet balance. However, Cochran, supported by on-chain data available on DefiLlama, points out that the reality seems starkly different. As of August 5th, Huobi reportedly held less than $90 million in assets across USDT and USD Coin (USDC) combined.
Cochran’s damning deduction from these figures?
“Huobi is deeply insolvent.”
Chinese Crackdowns and Leadership Exits
Complementing this financial quandary are claims of ongoing investigations by Chinese authorities. These rumors gained momentum with the emergence of news about the departure of at least one C-level executive from Huobi in recent weeks. While the circumstances surrounding this exit remain unclear, it has contributed significantly to the overall ambiance of uncertainty.
Huobi has not remained entirely silent amid this turmoil. A spokesperson has denied the rumors, labeling them as fake news. However, the company has yet to provide a concrete response to the allegations of insolvency and the discrepancies pointed out between their on-chain data and the audit report.
As this complex saga unfolds, Huobi stands at a critical juncture. The outcome could have far-reaching implications for not just Huobi but the entire crypto landscape.