Huobi Grapples with Rumors of Insolvency Amidst Hefty Outflows

The Huobi cryptocurrency exchange has been hit with outflows totaling a staggering $64 million this past weekend, continuing a long decline in the total value locked (TVL) on the exchange to $2.5 billion from $3 billion a month ago, reportedly.

Adam Cochran—a fintech executive, angel investor, and renown crypto Twitter analyst—recently raised eyebrows with a series of statements regarding the apparent financial instability of Huobi. He reported that global crypto heavyweight Binance had commenced the bulk sale of Tether (USDT), a leading stablecoin.

"Why is Tether selling off? Likely due to Huobi's insolvency," Cochran mused, later adding that there had been "weird balance shifts at Huobi" over the past month.

Cochran connected these observations with recent rumors that Huobi executives and personnel from Tron, a blockchain platform founded by crypto entrepreneur Justin Sun, were questioned by police.

Cochran then broke down his understanding of Huobi's holdings.

"Across USDT and USDC combined, Huobi only holds $90M of assets," he alleged. "Huobi's own 'Merkle Tree Audit' still lists that Huobi users have $630M of USDT held and a wallet balance of $631M USDT—users think they have balances of $631M in Huobi, but there is only $90M there."

The missing funds, Cochrane theorized, are being used to prop up the yields of Tron, Poloniex, and other DeFi apps operated by Sun. But even those amounts suggests that Sun "only seems to have about half the total obligations for Huobi."

Following these claims, the exchange's head of social media responded on Twitter, saying the report of police involvement "has been pure rumors" and asserting that "all operation has been normal as usual" at Huobi.

"I believe there needs to be more investigation into the information source and avoid FUD," she wrote.

Cochran stood his ground, revealing that his source is "a senior executive at Tron who has first-hand knowledge of the investigation and has been at Tron for many years."

"Whether you've been informed or not, your colleagues are currently under criminal investigation," he concluded.

(Source: Decrypt)