Huobi’s TVL Drops Amid Reports of Executive Arrests Investigations and Insolvency Concerns

Jimmy Aki
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Amidst ongoing speculations about its financial stability and reports of Chinese authorities scrutinizing its executives, crypto platform Huobi encountered a withdrawal totaling around $64 million on August 5th and 6th. This resulted in a decline of 30% in its stablecoin reserves.

Huobi’s TVL drops to $2.5B

Huobi, a prominent global cryptocurrency exchange, has recently captured attention due to a substantial decline in its Total Value Locked (TVL), plummeting to $2.5 billion.

Over the weekend, the exchange experienced noteworthy outflows amounting to $64 million. These developments coincided with rumors surrounding Huobi’s financial stability and reports suggesting that Chinese authorities were delving into investigations involving its executives.

Recent data from Nansen.ai reveals a 33% decrease in Huobi’s stablecoin exchange balances over the past week, with traders withdrawing $49 million in stablecoins.

Furthermore, information from DeFiLlama points out that Huobi’s current balance is around $2.5 billion, marking a drop from the $3.1 billion recorded at the year’s outset.

A closer examination of on-chain data also reveals a composition of Huobi’s holdings, showing that 26.5% are tied to TRX, the token of TRON, while 20.32% are attributed to HT, the exchange’s token.

This drop in TVL was preceded by rumors about the potential arrest of Huobi’s executives in China. The rumors, which emerged on August 4th, are supposedly connected to an investigation involving the exchange’s engagement with gambling platforms.

According to Hong Kong media outlet Techub.NEWS, two insiders disclosed that at least three Huobi executives overseeing areas like human resources, research and development, and finance had been apprehended by Chinese authorities for questioning.

Other reports also suggested that certain employees were instructed to urgently leave the country.

These rumors were backed by Colin Wu of Wu Blockchain, who mentioned the broad detention of senior executives from offshore cryptocurrency exchanges by Chinese police.

However, Huobi’s head of social media, communicating through X (formerly Twitter), vehemently denied these rumors, affirming the exchange’s current well-being.

Responding to her statement, Fintech executive and angel investor Adam Cochran expressed concerns about potential insolvency due to discrepancies in Huobi’s Tether holdings.

Cochran highlighted a scenario where, by combining USDT and USD Coin, Huobi would possess less than $90 million in assets as of August 5th.

On the other hand, he noted that Huobi’s most recent “Merkle Tree Audit” asserted that users hold $630 million in USDT with a wallet balance of $631 million USDT.

Cochran, however, stands firm in his position that Huobi is grappling with significant insolvency challenges.

Huobi Halts Operations in Malaysia

The recent crackdown by the Chinese government on Huobi seems to be part of the troubles the crypto exchange has been facing in the past months.

Recently, Huobi Global was ordered to cease its operations in Malaysia due to an enforcement measure enacted by the nation’s securities regulator.

An official announcement from the Securities Commission Malaysia (SCM) on May 22nd revealed that Huobi Global did not meet the required registration criteria to function as a cryptocurrency exchange operator. This led to the exchange being obligated to halt all of its activities.

As part of the measure, Huobi’s website and mobile applications available on platforms such as Apple Store and Google Play were also directed to be deactivated.

Furthermore, the exchange was instructed to cease promotional endeavors aimed at Malaysian users through channels like email and social media.

The decision by SCM was primarily motivated by apprehensions surrounding Huobi’s adherence to the local regulatory framework.

The regulatory body stated, “Since Huobi’s attempts to secure SCM registration were unsuccessful, they have instructed investors from Malaysia to cease trading on the platform, retrieve their funds, and terminate their accounts.”

Following the public announcement, Huobi expressed its engagement in dialogues with Malaysian regulatory authorities concerning its operations in the region.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.