- The arrest of Huobi and Tron executives raises questions about Huobi’s financial health.
- Crypto analyst Adam Cochran looks at Huobi’s balance sheet.
- He reveals signs of potential financial instability for the exchange.
Crypto exchange Huobi has been under the spotlight following the arrest of its top executives. This has left the crypto community wondering about the future of the exchange and its potential impact on the broader market.
Huobi’s Financial Health: A Closer Look
On Friday, August 4, 2023, the crypto world was rocked by news of the arrest of executives from Huobi and Tron. The move has led to more online discussions about the stability of the exchange.
Crypto analyst Adam Cochran took to Twitter on August 6 to share his analysis of Huobi’s balance sheet. According to Cochran, Huobi’s total balance stands at $2.5 billion, with significant portions in Tron ($662 million), Huobi Token (HT, $500 million), Bitcoin (BTC, $884 million), and Huobi Bitcoin (HBTC, $168 million). Aside from that, the exchange has $286 million in other assets.
Cochran points out that the total liquid assets on the exchange are less than the reported amount of USDT obligations. This discrepancy raises concerns about Huobi’s ability to meet its financial obligations, particularly if a large number of users were to withdraw their assets.
In response to Cochran’s analysis, one Twitter user pointed out that Cochran does not include the $400 million in stUSDT that Huobi lists as reserves. This sum would explain the discrepancy in the analysis; however, the analyst questioned this TRON-based stablecoin earlier.
The potential financial instability of Huobi has far-reaching implications. As one of the largest crypto exchanges, any financial instability could have a ripple effect on the broader crypto market. Furthermore, the arrest of Huobi and Tron executives could lead to a loss of confidence in the exchange.
Huobi Employees Concerned: Justin Sun Responds
Cochran also shared rumors about internal communication at Huobi. According to his tweets, Huobi executives assure employees that Tron founder Justin Sun will cover any losses the exchange may incur with his wealth.
This revelation suggests a significant level of internal concern at Huobi. Moreover, Cochran points out that this would mean that Huobi’s assets largely depend on IOUs from its founder.
Sponsored
Amid Huobi’s financial stability concerns, Justin Sun weighed in on social media. He urged his followers to “ignore the FUD” around Huobi and TRON. Huobi also denied the allegations of insolvency.
Despite the official denial, Cochran remains unconvinced. In a tweet, he wrote, “Huobi denied the rumors. Yeah, did you expect Justin to be like – oh yeah we’re insolvent?”
“People lie. Blockchains don’t,” Cochran added.
On the Flipside
stUSDT is not the first controversial stablecoin on TRON. In January 2023, DailyCoin published a report on USDD, a TRON-based stablecoin with opaque reserves and a built-in back door in its smart contract.
Sun’s troubles in China come after US Securities and Exchange Commission (SEC) sued him over securities fraud, among other offenses.
Why This Matters
For crypto traders, the situation at Huobi serves as a stark reminder of transparency for crypto exchanges. The potential losses that could be incurred if Huobi fails to meet its obligations underline the risks of trusting centralized entities.
Read more about Justin Sun, the controversial owner of TRON and Huobi
Justin Sun: From Ripple Employee to Tron Founder
Read more about Commissioner Peirce and her stance on the SEC’s crypto crackdown:
Commissioner Peirce: SEC Should Ask Crypto Investors What Protections They Need
