Huobi's TVL falls to $2.5 billion amid fears of collapse and investigations in China
August 7, 2023 2:05 AM
There are persistent rumors about the exchange's stablecoin reserves, as well as a purported investigation by Chinese officials.
In the face of continuing accusations regarding its solvency and that Chinese authorities were looking into its leadership, cryptocurrency exchange Huobi had outflows totaling $64 million between August 5 and 6. Due to withdrawals over the weekend, the total value locked (TVL) of the exchange has dropped→ from $3.09 billion on July 6 to $2.5 billion at the time of writing.
Rumors circulated on Aug. 4 that the exchange's leaders was recently arrested in China as part of a purported investigation into the exchange's links with gambling sites.
The crypto exchange is also said→ to be insolvent. Adam Cochran, a fintech expert, and angel investor, stated in a series of tweets that the company may be insolvent due to anomalies in its Tether (USDT) holdings.
Based on on-chain data available through DeFiLlama, Cochran stated that on August 5, Huobi had less than $90 million in assets across USDT and USD Coin (USDC). The current 'Merkle Tree Audit' from the exchange, on the other hand, shows that "Huobi users have $630M in USDT held and a wallet balance of $631M USDT," according to the post. Cochran claims that "Huobi is deeply insolvent."
On August 6, Huobi wallets had only $72 million in USDT and USDC combined, according→ to DefiLlama data.
USDT and USDC reserves of Huobi on August 6. Source: DefiLlama.
Huobi did not answer immediately to Cointelegraph's request for clarification about reports of insolvency and gaps between on-chain data and their audit report.
Huobi is also facing legal problems in other jurisdictions. In May, the Malaysian securities authority forced the exchange to close its operations in the country.