Huobi Faces Turmoil

Huobi experienced $64 million in outflows between August 5 and 6, amidst ongoing allegations about its solvency and that Chinese authorities were investigating its executives.

The total value locked (TVL) of the exchange fell to $2.5 billion at the time of writing from $3.09 billion on July 6.

As part of a purported investigation into the exchange’s dealings with gambling platforms, rumors that the exchange’s leadership had been detained in China first surfaced on August 4.

A Huobi representative characterized the claims as false news.

In mainland China, authorities reportedly restrict control over cryptocurrency exchanges, causing rumors to circulate.

At least one C-level executive has reportedly departed Huobi in recent weeks, although it is unclear whether it relates to investigations in China.

Huobi’s social media director stated on X (formerly Twitter) that the rumors are false and that the exchange is “currently doing well.”

Moreover, the cryptocurrency exchange allegedly confronts solvency issues.

Adam Cochran, a fintech executive and venture investor, stated in a series of blog posts that the company may be bankrupt due to inconsistencies in its Tether holdings.

Cochran, supported by on-chain data available on DefiLlama, noted that Huobi held less than $90 million in assets across USDT and USD Coin on August 5.

According to the exchange’s most recent “Merkle Tree Audit,” however, “Huobi users hold $630 million in USDT and have a wallet balance of $631 million USDT.” According to Cochran, “Huobi is deeply insolvent.”

According to data from DefiLlama, as of August 6, Huobi wallets held $72 million in USDT and USDC.

Huobi did not immediately respond to a request for comment on allegations of insolvency and discrepancies between its audit report and on-chain data.

Huobi faces obstacles in additional jurisdictions. In May, the exchange was compelled to cease operations in Malaysia due to enforcement action by the Malaysian securities regulator.