Over the weekend, the Huobi cryptocurrency exchange experienced a massive outflow of investment capital, which exceeded $64 billion. Such dynamics was due to information that the Chinese authorities are investigating the activities of the exchange management. Rumors about her potential insolvency also began to circulate.
Against this background, the total value of assets locked (TVL) decreased from $3.09 billion to $2.5 billion. There was also information that Huobi executives were arrested, allegedly due to their connection with the gaming floors. The current situation suggests that the Chinese authorities are acting more harshly in relation to specialized exchanges. Moreover, one of the top managers of Huobi left his post. But it is not yet clear whether this was somehow connected with the investigation of the PRC leadership in relation to the site.
This situation was commented on by the head of Huobi Justin Sun. According to him, all the rumors spread about the activities of his exchange are false. However, in this context, it is worth noting a recent report by Fintech CEO Adam Cochran that found inconsistencies in the platform’s assets.
According to his August 5 data, Huobi has less than $90 million in assets, but the site’s audit report indicates an amount of $630 million. Against this background, Cochran came to the conclusion that the exchange’s assets simply would not be enough to cover all liabilities. This, in turn, indicates potential insolvency.
There has been quite a lot of news about the problems of this exchange in the past. But you have to give Justin Sun credit, as he has always strived to be transparent in his interactions with consumers.
Meanwhile, Huobi continues to monitor crypto developments in Hong Kong. It is noteworthy that in February of this year, the platform filed a request with the local regulator for a license to operate in the region.