Huobi, one of the prominent cryptocurrency exchanges, is facing a tumultuous period as rumors of solvency issues and investigations by Chinese authorities swirl around the platform. Over a span of two days, from August 5 to 6, the exchange experienced outflows amounting to $64 million, resulting in a significant drop in its total value locked (TVL) from $3.09 billion on July 6 to $2.5 billion at the time of writing. Allegations of Huobi’s leadership being arrested in China and a purported investigation into its dealings with gambling platforms have added to the mounting uncertainties.

The Storm of Rumors and Investigations Against Huobi

On August 4, rumors began circulating that Huobi’s executives were arrested in China, supposedly as part of an investigation into the exchange’s activities with gambling platforms. In response to these claims, a spokesperson of the exchange dismissed them as fake news. However, the rumors surfaced amid reports of Chinese authorities tightening control over cryptocurrency exchanges within the mainland. Although Huobi’s head of social media has refuted the allegations on social media, concerns persist as authorities scrutinize the crypto industry in the country.

Read more: Huobi Global Review: Is it a Good Exchange?

Huobi'S Usdt, Usdc Token Reserve At The Time Of Writing This Article (Source: Defilama)
The exchange’s USDT, USDC Reserve Amount at the time of writing this article (Source: Defilama)

Furthermore, Huobi’s solvency is being called into question. Fintech executive and angel investor Adam Cochran highlighted potential inconsistencies in the exchange’s Tether USDT holdings. Based on on-chain data available on DefiLlama, Cochran pointed out that the exchange held less than $90 million in combined USDT and USD Coin (USDC) assets on August 5. This discrepancy contradicts the exchange’s recent “Merkle Tree Audit,” which claimed that the exchange’s users held $630 million in USDT with a wallet balance of $631 million. According to Cochran’s analysis, this suggests that Huobi may be deeply insolvent.

Read more: USDT Depegged as Traders Dump on Curve and UniSwap

Challenges Extend to Other Jurisdictions

Source: Yahoo Finance

Huobi’s troubles are not limited to China alone. The exchange faced enforcement action from the Malaysian securities regulator, leading to the closure of its operations in the country in May. These challenges in multiple jurisdictions have contributed to the growing uncertainty surrounding the exchange and have fueled investor concerns about the platform’s stability and trustworthiness.


Huobi is currently grappling with a series of issues that have raised doubts about its solvency and trustworthiness. Persistent rumors of insolvency, investigations by Chinese authorities, and discrepancies in on-chain data have all contributed to the decline in its total value locked. As the situation unfolds, it faces a critical test in rebuilding investor confidence and ensuring transparency in its operations.

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