Rumors Swirl as Huobi Cryptocurrency Exchange Faces Rapid User Fund Withdrawals

by Aug 7, 2023CryptoNews0 comments

As rumors swirl around the cryptocurrency exchange Huobi, its users have been withdrawing their funds at a rapid pace. The exchange’s total value locked (TVL) has dropped to $2.5 billion, a 20% decrease from a month ago.

The rumors started on Aug. 4, when some online sources claimed that Huobi’s executives had been arrested by Chinese authorities for allegedly facilitating gambling activities with crypto. Huobi denied the allegations and called them fake news. However, the rumors persisted and spread on social media platforms.

Huobi also faces accusations of being insolvent, as some analysts pointed out discrepancies between its reported and actual stablecoin reserves. According to Huobi’s latest audit report, the exchange claims to have $631 million worth of Tether (USDT) in its wallets. However, according to on-chain data from DefiLlama, Huobi only holds $72 million worth of USDT and USD Coin (USDC) combined.

Adam Cochran, a fintech executive and angel investor, suggested that Huobi is deeply insolvent and that Binance, the world’s largest crypto exchange, has been selling off USDT in bulk to avoid exposure to Huobi’s risk. Cochran also claimed that he had confirmation from a senior executive at Tron that Huobi’s team members were under investigation by the police.

Huobi did not respond to Cointelegraph’s request for comment on the rumors of insolvency and the audit report discrepancy. The exchange has been operating normally and has not issued any official statement regarding the situation.

The rumors come at a time when China is cracking down on crypto-related activities and tightening its regulatory oversight on crypto exchanges. In June, the Financial Conduct Authority (FCA), the UK’s financial watchdog, banned Binance from offering regulated services in the UK without its authorization. The FCA also requires all crypto firms operating in the UK to register with it and comply with anti-money laundering and know-your-customer rules.

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Huobi is one of the oldest and largest crypto exchanges in the world, with over 5 million users in more than 130 countries. It was founded in China in 2013, but later moved its headquarters to Seychelles to avoid regulatory pressure. It also has offices in Singapore, Japan, South Korea, and other countries.

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