In a recent development, Justin Sun, founder of popular blockchain Tron, has urged people to disregard speculations that the crypto exchange Huobi is facing severe challenges following news of the alleged detention of some of the platform’s officials.
The rumors appear to be a major contributing factor to why the firm experienced multi-million withdrawals during the weekend, while Tron’s Total Value Locked (TVL) has fallen below $2.5 billion.
Trouble In Paradise?
Over the past weekend, cryptocurrency exchange Huobi experienced massive outflows worth about $64 million amid reports that Chinese authorities were investigating its executives and the likelihood of insolvency.
There were speculations that the platform’s leaders were arrested on the 5th of August in China. According to popular Chinese reporter Colin Wu, the arrest was due to Huobi’s involvement with gambling websites. One top official of the exchange also recently left the company, though it remains unclear if that was connected to the ongoing investigations by Chinese authorities.
A third of the $64 million is believed to be made up of Bitcoin (BTC), while Tron’s native token (TRX) and Huobi Token (HT) follow respectively at 26.5% and 20.3%. The rumors were so rife that the withdrawals triggered serious volatility in HT’s price and the token fluctuated during the weekend before settling at its present level of about $2.66.
Furthermore, there are also rumors that the exchange is undergoing protracted financial challenges. According to Adam Cochran, an angel investor and fintech executive, there are some discrepancies in the platform’s Tether (USDT) holding.
Based on on-chain data, Huobi held less than $90 million of assets on the 5th of August. However, their recent “Merkle Tree Audit” claims they hold $630 million in USDT.
Cochran believes this means that Huobi might be insolvent, implying the platform may not have sufficient funds to meet its obligations.
Huobi Reacts To Speculations
In response to the speculations, Justin Sun, who serves as an Advisor to the exchange, recently took to his Twitter account to offer some clarifications. In a series of tweets, he asked users to “ignore FUD, keep! #TRON and Huobi will thrive through continuous development. Trust in our vision and community efforts for a stronger future. Perseverance guarantees success!”
Many users simply responded by posting the figure “4” below his tweet. The figure, which was popularized in the crypto space by Changpeng ‘CZ’ Zhao, Binance CEO, simply means “Ignore FUD, fake news, attacks, etc.”
This is not the first time Sun and his team are facing serious troubles. In the past, there have been rumors of financial troubles at the exchange. However, it remains to be seen what the likely fallout would be in the most recent event.