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# Huobi Rumors and Facts: Investigations, Solvency Concerns, and Binance’s Strategic Moves
- URL: https://www.metatalks.ai/huobi-rumors-and-facts-investigations-solvency-concerns-and-binances-strategic-moves/
- Published: 2023-08-07T08:45:51.000Z
- Updated: 2023-08-07T08:45:51.000Z
- Author: Katelyn Chow
- Tags: huobi, cryptoexchange, exchange, crypto, cryptocurrency, china, analytics, rumors

Crypto exchange [Huobi](https://twitter.com/HuobiGlobal?ref=metatalks.ai) experienced significant [outflows worth $64 million](https://cointelegraph.com/news/huobi-tvl-drops-amid-rumors-insolvency-investigations-china?ref=metatalks.ai) during the weekend amid rumors regarding investigations conducted by Chinese authorities into its executives and the [exchange’s insolvency](https://twitter.com/adamscochran/status/1687959096316542976?ref=metatalks.ai).

![](https://lh5.googleusercontent.com/pKElUd6sx-51GbxHoNLMHBy5aUMMrSHtN_89miIQVGbM6iivG24NkFI9YaUVQtMvQaf5Lo56OL_7D6g12RMNDgYWCVGGWpRfMUR8bsug54M9b7DakQjZYqyxWdbY-qxBBJRMieH9a0XrXWo4_b3K9jlFxmU112ZP)

On August 4, rumors emerged about the possible arrest of exchange executives in China, which were said to be connected to an alleged investigation into the exchange’s dealings with gambling platforms.

![](https://lh6.googleusercontent.com/8EA3B_fRt5Dgq8biljSjnBmw1ulpORvJVO5fwroDdt_X7PMiamM3WWzEUayOPFC7xbzE0I3_M2Aks0F9y_SotDYEEmDc2Q7bNJlSa66dMzxva1GJ-Q15JkaXs-Tf6vkcvfyX9eyH6cRdqRgbO7GaKrxFgArswjCW)

*(*[*Thread*](https://twitter.com/adamscochran/status/1687859304202997760?ref=metatalks.ai)*)*

Huobi’s spokespersons refused the claims, dismissing them as fake news. The head of the exchange’s social media department [clarified](https://twitter.com/xiejiayinHuobi/status/1688042366266159105?ref=metatalks.ai) on Twitter that the rumors were unfounded and the exchange is “currently doing well.”

![](https://lh4.googleusercontent.com/AM4-3W9A4Itxst5LQDS7HsNBUk-GLpZRG0fa-mtRO0S5WmZ2yO577Fhrcx0G23VeGEJjP5USXzhHeLbFD8nXeORu9DtcM-XT153e6G1lG_UJ3bAxCXwoqCP2GDWziOJdXeLGPaJQniHWTwHnvLQrA4Q893GUqeFA)

![](https://lh6.googleusercontent.com/DsXLqgnC5atpmkrTxyeCtTocWJVSA90m2RqeAfTrpKQDaD10RBIP69Veoqf-URxlAFwETs_fLrSStRtjKWBEVn_YCm78SJVSfVzKlYoHAKUddE5s66JmnW2dEyjLNcUEPcqpL2bUAGFGHLF3kFb4j1dw2BUoruuz)

Concerns over Huobi’s solvency have been raised as well. In his tweets [thread](https://twitter.com/adamscochran/status/1687959096316542976?ref=metatalks.ai), Fintech executive and angel investor Adam Cochran pointed out discrepancies in the exchange’s USDT assets, suggesting possible insolvency.

![](https://lh5.googleusercontent.com/lGH3n29xhS6R5_xUtxlDUhjEvyPo2vYX7gIKGueGsDuGLfP3w_3edIxsjbW5j4hcl7UenboxGDTeu4sv57aUgTckBtXKL8bGe9RZL_d4bhJdjV15d8ab9VpAeyz8EFHvFUTETasgmQ6GhMg0zfYNc8xJ62AtK1SE)

According to on-chain data by [@DeFiLlama](https://twitter.com/DefiLlama?ref=metatalks.ai), on August 5, the exchange held less than $90 million in USDT and USDC combined. However, Huobi’s latest “Merkle tree audit” report claimed that “Huobi users have $630M in USDT held and a wallet balance of $631M USDT.” Another troubling aspect of this discrepancy is that the Merkle tree audit stopped updating last month.

![](https://lh3.googleusercontent.com/xgV_VxAgeosWpcy15KHM2tAzCEVGIyAtRBRwxmuHf5ZuzdMCar49wJQaNiggJw-07VcV2RPY9dBGBEYVUjfov4nSJl6u1CM97V16EP5___X1KVSRxQ3DOhGA49DDF5eUCvEn9k9xpxfXm0T9WG42OR3DSUpyvbui)

Cochrane’s analysis [suggests](https://twitter.com/adamscochran/status/1687959108215885825?ref=metatalks.ai) Huobi’s USDT assets shortage may be linked to the actions of [Justin Sun](https://twitter.com/justinsuntron?ref=metatalks.ai), the founder of the Tron network. Sun is accused of using Huobi users’ assets to support his DeFi applications, artificially inflating yields to attract more deposits to Huobi.

![](https://lh5.googleusercontent.com/ESjXwq4pSzUQ6LeP3AQ2zJZg2CJu3_DXhDrpU_Nl3PZfyXdI4Sik4QgLC9TlATDhesSDt4hobvbRkZCilQBN8JjKvDk5redMhdkJs94zsi8iMRPFjwHK9qD4yKQedY_oMOP6eEqhXBHJR7rjvNBEW2fprAxEi0Lj)

*(*[*Thread*](https://twitter.com/adamscochran/status/1687959108215885825?ref=metatalks.ai)*)*

Furthermore, Cochran claims that Sun converted users’ ETH balances into stETH, with only half of the total 141,000 ETH believed to be owned by Huobi users actually present in Sun’s accounts.

![](https://lh5.googleusercontent.com/Rv7v3W2iDu9AxrV2SgRnAQ-Qm-oIjfdACX0YUsPdvZ6AbY5y5oLiRpzT4nNxcmx8SkJci4llkr1PmJ9WIcEkHFL01rbl9qxy12XLqPSkUinNtb65peflJInlJzvK8RjS6tIsBHao81a3nq-HrH2dG1XsI9Tlnwh3)

*(*[*Thread*](https://twitter.com/adamscochran/status/1687959129380282368?ref=metatalks.ai)*)*

According to the analyst, Binance’s aggressive USDT sell-off might be a strategic move against Huobi (aiming at reducing USDT’s dominance in the market and promoting other stablecoins that Binance can control and profit from), or it might be a risk mitigation strategy, possibly in response to reports of investigations into Huobi and Tron employees. Additionally, one may suggest that Binance may be aware of Sun’s over-claimed USDT holdings on Huobi and aims to protect against a potential mass sell-off from Huobi users.

![](https://lh5.googleusercontent.com/1NrtKSaZ4jBynWV8-vPC0IkS7-uhoHXXdjx3ba0hwwq45ii0IS_JGFuTz0bFr-WX_8MSTfwZdt1nOaZMQk4oBDkWlRLHQpxwOI-kRTrvM6-8EdxfV007hFsHHvIrLa826RHlZNZEZ9tn5EIJV0P7B9PZ-HllLYWr)

![](https://lh3.googleusercontent.com/tOFcfaQ4bAiokEfZ7waEyuqAAhYUkQwFbKgaQRzgB9b7Iw6xd0SZkR9jD_ZVGM-dvxLjVRE3z-ZfYK3F7aqI9yv9QX5GNlKBJPcftwm9VwsHXjj_TecrF-V9oFbpfZluGJpmXeR9H6DZn7zaFnEfFVYEJnO2YZj3)

![](https://lh5.googleusercontent.com/RQ-Tra0ehtuLV8edSmLXIiD4zHVPuNjEHszMh0G92ebUfMikaDrfDhUaiRYb-DkUKSNspgSpYJiynks6Thok9Q4bsGyeAncxXTFsO-yEWQVLLHtL-gtTTdEMF6QvAO56kkMbuhkVSuLQLKjRc6EkbJ35hX4FwCB7)