Huobi, a prominent cryptocurrency exchange, experienced significant outflows totaling $64 million from August 5 to 6, amid persistent rumors surrounding its solvency and potential investigations by Chinese authorities.
As a result of these outflows, the exchange’s total value locked (TVL) decreased to $2.5 billion at the time of reporting, down from $3.09 billion on July 6.
The rumors initially surfaced on August 4, suggesting that Huobi’s leadership in China had been arrested due to alleged involvement with gambling platforms.
A spokesperson from Huobi swiftly dismissed these claims as fake news when speaking with Cointelegraph.
The rumors come in the context of growing scrutiny and tighter control over cryptocurrency exchanges within mainland China.
While at least one C-level executive has left Huobi in recent weeks, it remains uncertain whether this departure is related to the investigations in China.
The exchange’s head of social media also refuted the rumors on a social media platform, stating that Huobi is currently performing well.
Additional concerns about Huobi’s financial situation have been raised by Fintech executive and angel investor Adam Cochran.
He highlighted inconsistencies in the exchange’s Tether (USDT) holdings. Cochran referred to on-chain data from DefiLlama, indicating that Huobi held less than $90 million in assets across USDT and USD Coin (USDC) on August 5.
In contrast, Huobi’s latest “Merkle Tree Audit” claimed that users had $630 million in USDT held and a wallet balance of $631 million USDT. Cochran concluded that Huobi is potentially insolvent.
Despite these claims, Huobi has yet to respond to Cointelegraph’s request for clarification regarding the rumors of insolvency and discrepancies between on-chain data and its audit report.
In addition to the solvency concerns, Huobi faces challenges in other jurisdictions.
In May, the Malaysian securities regulator took enforcement action against the exchange, resulting in the closure of its operations in the country.
The situation surrounding Huobi remains fluid as investors and regulators closely monitor the developments.
The exchange’s reputation and stability are at stake as it navigates through the uncertainties surrounding its financial standing and potential legal issues in China and beyond.
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