• Fintech investor Adam Cochran points out major cracks in Huobi’s financial strength and calls the exchange to be deeply insolvent.
• Huobi chief Justin Sun denied rumors calling them FUD and added Huobi continues to build up.

Over the last weekend between August 5-6, crypto exchange Huobi witnessed massive outflows worth $64 amid rumors of its insolvency and Chinese authorities investigating Huobi executives. As part of these outflows, the total value locked (TVL) on the Huobi exchange has dropped to $2.5 billion, which was previously at $3.06 billion in July. As of August 09, this has climbed back above $3.22 billion.

On August 4, rumors began spreading that the leaders of the exchange were arrested in China due to an alleged investigation involving the exchange’s connections with gambling platforms. Additionally, there are reports that one high-ranking executive has recently left Huobi, but it’s not clear if this departure is linked to the investigations in China.

There are allegations that the crypto exchange, Huobi, is facing financial difficulties. Fintech executive and angel investor Adam Cochran raised concerns about the firm’s solvency due to discrepancies in its Tether (USDT) holdings.

Based on on-chain data from DefiLlama, Cochran pointed out that when combining USDT and USD Coin (USDC), Huobi held less than $90 million of assets on August 5. According to Cochran, this indicates that Huobi is deeply insolvent.

As of August 09, USDT and USDC held by Huobi have made a recovery surpassing $250 million.

Cochran also believes that Binance, another cryptocurrency exchange, may be strategically selling its Tether holdings in large quantities to weaken USDT’s dominance. This move could promote other stablecoins that Binance controls and profits from. Additionally, Cochran suggests that Binance might be aware of Sun’s potentially overstated USDT holdings and wants to protect itself from a potential mass sell-off by Huobi users.

Moreover, Cochran suggests that Binance’s aggressive sell-off of USDT might be a precautionary measure, as they have learned about investigations involving Huobi and Tron employees. These allegations raise concerns about Huobi’s financial stability and add to the speculations about possible insolvency.

Justin Sun Debunks Huobi Insolvency Rumors

Huobi’s head of social media recently tweeted that the rumors are untrue and that the exchange is “currently doing well”. However, Cochran responded by stating that his source is a senior executive at Tron and holds first-hand knowledge regarding the ongoing investigation.

Huobi chief and Tron founder Justin Sun has also responded to the developments asking his followers to ignore the FUD. In his message on Twitter, Sun wrote:

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!

In an official message on Sunday, August 6, the official Twitter handle of Huobi also tweeted rejecting the FUD. Furthermore, the exchange noted that they are conducting Primevote, which allows the community and users to vote for currency listings. Our commitment is to provide voting rights to the community and users, ensuring they have a fair trading environment.

Huobi has been stretching its arms to expand its operations into other markets. The crypto exchange is looking to set up its base in evolving crypto-friendly jurisdiction of Hong Kong.