Huobi, a prominent cryptocurrency exchange, experienced a significant outflow of $64 million over the past weekend, contributing to a continuous decline in its total value locked (TVL) on the platform. The TVL dropped from $3 billion to $2.5 billion within a month, according to DeFiLlama.

USDT

Adam Cochran, a notable crypto Twitter analyst and fintech executive, raised concerns about Huobi’s financial stability. Cochran suggested that the massive sale of Tether (USDT), a leading stablecoin, by the major exchange Binance might be linked to Huobi’s potential insolvency. He also noted unusual balance shifts at Huobi in recent weeks.

Cochran connected these observations with rumors about Huobi executives and personnel from Tron, a blockchain platform led by Justin Sun, being questioned by law enforcement. He even shared a list of names of individuals who were reportedly detained, including heads of human resources, server operations, product, and chain tech, who all reported to Tron’s CTO Marus Zhong. However, the tweet containing the list was later deleted.

Cochran speculated on why Binance might be selling Tether, suggesting that they could be aiming to undermine USDT to promote stablecoins they control or to address concerns about Sun’s claimed USDT holdings on his exchange.

Alleged Gap In Balances

Cochran further delved into his assessment of Huobi’s holdings, asserting that the exchange holds only $90 million of assets across USDT and USDC combined. He alleged that Huobi’s users believe they have $631 million in balances, but there’s only $90 million available.

Cochran theorized that the missing funds might be used to support the yields of Tron, Poloniex, and other DeFi apps operated by Justin Sun. However, even these amounts seem to indicate that Sun may only be responsible for about half of Huobi’s total obligations.

In response, Huobi’s head of social media dismissed the reports of police involvement as rumors, stating that all operations have been running normally. Cochran maintained his claims, asserting that his source, a senior executive at Tron, possesses first-hand knowledge of the investigation.

Challenges

Huobi has faced various challenges throughout the year, including staff layoffs and an order to cease operations in Malaysia. Cointelegraph also reported the departure of at least one C-level executive from the exchange in recent weeks.