Over the past weekend, the Huobi cryptocurrency exchange experienced significant outflows totaling a staggering $64 million, adding to its ongoing decline in total value locked (TVL) from $3 billion a month ago to $2.5 billion, as reported by DeFiLlama.
Adam Cochran, a well-known fintech executive, angel investor, and crypto Twitter analyst, raised concerns about Huobi’s financial stability. He pointed out that Binance, a major player in the crypto space, was selling off Tether (USDT), a leading stablecoin, which he theorized might be connected to Huobi’s possible insolvency. Cochran observed unusual balance shifts at Huobi over the past month and connected them to rumors of police questioning Huobi executives and personnel from Tron, a blockchain platform founded by Justin Sun, a crypto entrepreneur.
While Cochran listed names of people he claimed were detained, including key figures reporting to Tron CTO Marus Zhong, the tweet was later deleted. He speculated that Huobi might be using missing funds to support the yields of Tron, Poloniex, and other DeFi apps operated by Sun, but also noted that Sun might not have the claimed amount of USDT, which could lead to users mass dumping to escape his exchange.
Huobi’s head of social media responded to Cochran’s claims on Twitter, dismissing the report of police involvement as mere rumors and asserting that all operations at Huobi were functioning normally. Cochran stood by his information source, stating that it came from a senior executive at Tron with direct knowledge of the investigation.
Throughout the year, Huobi has faced various challenges, including laying off 20% of its staff in January and being ordered to cease operations in Malaysia. There have also been reports of at least one C-level executive leaving the exchange in recent weeks.