Angel investor Adam Cochran claims, "Huobi is deeply insolvent."
With the ominous cloud of insolvency rumors and alleged investigation of its senior executives by Chinese authorities, from August 5th to 6th, cryptocurrency exchange Huobi has witnessed a wave of outflows of $64 million, plummeting its total value locked (TVL) to $2.5 billion.
According to the DeFiLlama data, the crypto exchange's TVL started declining on July 14th, slipping from $3.08 to the current value.
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Rumors regarding the arrests of the crypto exchange's leadership in China first made headlines on August 4th. The arrest rumors were linked to an alleged examination of Huobi's transactions with gambling platforms.
When asked about the matter, Huobi's spokesperson highlighted that the claims were fake news. The rumor mill started swirling at a time when tightening regulations over cryptocurrency exchanges in mainland China are reportedly in the pipeline.
It is believed that in recent weeks, at least one executive of C-level standing has severed ties with Huobi. The reasons behind the departure remain vague, with no clarity on whether it is linked to the ongoing probes in China.
Refuting the rumors, Huobi's head of social media made a statement on X (formerly known as Twitter), assuring that the crypto exchange is "currently doing well."
Additionally, Huobi is facing allegations regarding its financial health. Adam Cochran, an executive in the fintech sector and angel investor, raised concerns over possible insolvency in a series of posts. He cited discrepancies in Huobi's Tether (USDT) holdings as the basis for his claims.
Using DefiLlama's on-chain data, Cochran highlighted that on August 5th, Huobi's combined holdings of USDT and USD Coin (USDC) were less than $90 million. Yet, the latest "Merkle Tree Audit" of the crypto exchange states, "Huobi users have $630M in USDT held and a wallet balance of $631M USDT."
Cochran concluded his argument by stating, "Huobi is deeply insolvent."
Amidst a turbulent backdrop of rumored investigations and whispers of financial instability, Huobi's total value locked has taken a significant hit.
It is worth noting that, in May, authorities in Malaysia ordered Huobi Global to cease all operations as it failed to obtain a required license.
