26 February 2024

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Huobi Triggers Insolvency Speculation Despite Drop in Total Locked Value, Records $64 Million in Outflows: Report

The Huobi crypto exchange has caused concern among members of the crypto sector, with many now speculating that the exchange may be facing insolvency. A lot of factors have contributed to rumours that the exchange is in serious financial trouble. This includes millions of dollars in recent outflows from the exchange, resulting in a dramatic drop in the exchange’s total value locked (TVL) status.

Huobi is said to have lost more than $64 million (or about Rs. 530 crores) over the weekend.

This reduced Huobi’s TVL from $3.9 billion (approximately Rs. 32,265 crore) in July to $2.5 billion (about Rs. 20,683 crores), according to DeFiLlama statistics on Monday.

Huobi experienced large outflows when suspicions of the exchange’s leadership being questioned in China appeared around August 4. Chinese authorities reportedly arrested executives from Huobi and Tron, charging that the cryptocurrency projects were involved in gambling schemes.

According to crypto expert Adam Cochran, China is looking into Huobi and Tron’s operations.

The Chinese police are investigating Fai Wang, Huobi’s Head of HR, and Wang Huanye, the company’s Head of Server Operations.

Cochran explained Huobi’s current business status in a long conversation on X, formerly Twitter.

Huobi’s social media chief denied the reports, but Cochran refuted her statements, claiming Tron execs verified the enquiry rumours.

“However, according to Huobi’s own “Merkle Tree Audit,” Huobi customers have $630M of USDT and a wallet balance of $631 (approximately Rs. 5,220 crore) USDT. Of course, this was no longer updated as of last month. So consumers believe they have $631 million (about Rs. 5,220 crore) in Huobi, yet there is only $90 million (approximately Rs. 744 crore) there,” Cochran wrote in his comments.

Huobi has not yet commented on the matter

Huobi’s apparent insolvency crisis has raised concern in the crypto market, as the last time a crypto exchange (FTX) collapsed, it resulted in a loss of more than $200 billion (about Rs. 16,54,572 crore), jolting the worldwide crypto community.