Huobi’s Troubles Deepen: Outflows, Tether Questions, and Market Worry

Key Points:

• Crypto analyst Adam Cochran raises alarms about Huobi’s financial stability and cites USDT’s inconsistency.
• The exchange sees over $60 million in outflows, while TVL drops to $2.5 billion.
• Binance’s USDT move raises worries amid the exchange’s challenges.

Fintech executive and crypto Twitter analyst Adam Cochran has raised concerns about Huobi’s financial stability.

Cochran highlighted a disparity in the exchange’s Tether (USDT) holdings, revealing that while the Merkle Tree Audit reported only $90 million in accounts, users believed they owned $631 million worth of USDT. Cochran suggested that actions taken by Tron founder Justin Sun might be contributing to this inconsistency. Sun allegedly used the exchange users’ assets to support his DeFi applications, potentially inflating yields to attract deposits.

Huobi is facing a significant setback as outflows of over $60 million over the past weekend exacerbated its ongoing decline in total value locked (TVL), dropping from $3 billion a month ago to $2.5 billion, according to DeFiLlama.

Cochran also indicated that Sun might have converted user Ethereum balances into stETH, with only half of the 141,000 ETH thought to be held by users present in Sun’s accounts. Moreover, Cochran proposed that cryptocurrency exchange Binance’s bulk sale of Tether might be aimed at diminishing USDT’s dominance while safeguarding itself against a possible mass sell-off from Huobi users aware of the situation.

Cochran’s allegations are worrisome for the exchange’s financial health, especially considering the company’s ongoing challenges, such as laying off 20% of its staff in January and facing an order to cease operations in Malaysia. However, its head of social media denied rumors of police involvement and insisted that operations were proceeding normally.

Cochran, backed by a source within Tron, asserted that Binance’s aggressive USDT sell-off could be a risk mitigation tactic based on their awareness of investigations into Huobi and Tron employees. These developments cast doubts on its financial stability, underscoring concerns of potential insolvency.

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