The exchange faces ongoing rumors about its falling stablecoins reserves and an alleged investigation by Chinese authorities.
Disclaimer: This article has been updated to reflect Huobi's claims against the ongoing insolvency rumors and provide additional information on outflows between Aug. 5-6.
Cryptocurrency exchange Huobi dismissed the ongoing rumors against its insolvency, which was fueled by total value locked (TVL) data that briefly showed $64 million in outflows between Aug. 5-6 amid ongoing investigations from Chinese authorities.
Outflows from Huobi over the weekend, based on data collected by decentralized finance (DeFi) TVL aggregator DefiLlama, showed the exchange’s TVL falling to $2.5 billion at the time of writing, down from $3.09 on July 6. Moreover, rumors that the exchange’s leadership had been arrested in China first surfaced on Aug. 4 as part of an alleged investigation into the exchange’s dealings with gambling platforms. Speaking to Cointelegraph, a Huobi spokesperson labeled the claims as fake news. Rumors surface as authorities are reportedly tightening up control over cryptocurrency exchanges in mainland China.
Cointelegraph has learned that at least one C-level executive has left Huobi over the past few weeks, although it’s unclear whether the departure is connected to any recent rumours. On social media platform X (formerly Twitter), Huobi’s head of social media said the rumors are untrue and that the exchange is “currently doing well.”
The source has been verified as a senior executive at Tron who has first hand knowledge of the investigation and has been at Tron for many years.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 6, 2023
Whether you’ve been informed or not, your colleagues are currently under criminal investigation.
Going against the falling TVL narrative, Nansen data confirmed a slight increase in Houbi's net worth from the weekend numbers — currently standing at nearly $3.2 billion. When it comes to token allocation, Huobi's reserves are dominated by Bitcoin (BTC) and Tron (TRX), both at over 23%.
When it comes to stablecoin reserves, Huobi allocated 12.57% or $400 million to Staked USDT (stUSDT), $63.1 million or 1.98% to USDT and $9.5 million or 0.55% USDC, confirmed Nansen data. The exchange has also allocated small percentages to other stablecoins, including Decentralized USD (USDD) at 0.55%, and TrueUSD (TUSD) at 0.08%.
DefiLlama data suggested that on Aug. 6, Huobi wallets held $72 million in USDT and USDC combined. However, on-chain data from Nansen was not reflective of unusual outflows.
Huobi did not immediately respond to Cointelegraph’s request to clarify rumors of insolvency and discrepancies between on-chain data and its audit report.
Huobi faces challenges in other jurisdictions as well. An enforcement action by the Malaysian securities regulator forced the exchange to close its operations in the country in May.
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