There’s been quite a stir in the crypto community as rumors swirl around the financial health of the Huobi cryptocurrency exchange. Reports suggest that the exchange experienced a substantial outflow of funds, with around $64 million leaving its coffers over the weekend. This is just another drop in the bucket for Huobi, as its total value locked (TVL) has been on a steady decline from $3 billion to $2.5 billion in the span of a month, according to data from DeFiLlama.
Noted crypto analyst Adam Cochran has raised some red flags regarding the stability of Huobi. Cochran, who is known for his insights on Twitter, pointed out that Binance, a major player in the crypto space, seemed to be offloading a significant amount of Tether (USDT), a widely used stablecoin. Cochran’s hypothesis was that this could be linked to potential financial troubles at Huobi.
Cochran’s concerns also stemmed from what he described as peculiar shifts in Huobi’s balance over the past month. He connected these observations to rumors circulating about executives from Huobi and Tron, a blockchain platform founded by Justin Sun, being questioned by law enforcement.
In a tweet, Cochran even listed the names of individuals who he claimed had been detained, including top figures in areas like human resources and server operations. However, the tweet was later deleted.
Cochran suggested two possible reasons for Binance’s apparent USDT sell-off: either they were trying to undermine Tether to promote their own stablecoins or they were skeptical about the actual reserves backing USDT at Huobi.
Cochran delved further into the numbers, asserting that Huobi’s combined holdings of USDT and USDC amounted to just $90 million. He pointed out that Huobi’s reported user balances of $631 million were not in line with the actual assets held by the exchange.
According to Cochran’s theory, the missing funds might be tied to supporting the yields of other DeFi applications connected to Justin Sun’s ventures, like Tron and Poloniex. However, Cochran admitted that even this calculation suggested that Sun might only have about half of the total obligations for Huobi.
Huobi’s social media head responded to Cochran’s claims on Twitter, dismissing reports of police involvement and insisting that the exchange’s operations were running as usual.
Cochran held his ground, revealing that his information came from a senior executive at Tron with direct knowledge of the investigation.
This isn’t the only trouble Huobi has faced this year. The exchange laid off 20% of its staff in January and had to halt operations in Malaysia. Recent reports also indicate that a C-level executive has departed from the exchange in recent weeks.