Prominent crypto analyst and investor Adam Cochran has called into question the solvency of Huobi, the 12th largest cryptocurrency exchange globally by spot trading volume.In a series of recent tweets, Cochran pointed to significant discrepancies in Huobi's reported Tether (USDT) holdings, suggesting that the firm might be failing to meet its financial obligations. Cochran bases his assertions on a detailed examination of Huobi's balance sheets and the recent activities of Justin Sun, the founder of Tron. Despite these allegations, Huobi maintains that all operations are proceeding as normal.
According to Cochran's investigation, Huobi's own "Merkle Tree Audit" indicates a significant discrepancy in the exchange's held assets. He points out that while the audit lists that Huobi users hold $631 million worth of Tether (USDT), Huobi's actual holdings amount to only $90 million. This significant gap, Cochran alleges, is indicative of insolvency.
Cochran further argues that Sun has been treating the exchange like a personal piggy bank, transferring funds to his decentralized finance (DeFi) projects and thus leaving the exchange unable to meet its obligations. Specifically, he alleges that Sun is inflating the yield on his DeFi apps to entice more deposits into Huobi.
Adding to the concerns, Cochran noted a substantial sell-off of Tether (USDT) on Binance, which he believes is connected to the solvency fears surrounding Huobi. He also raised questions about Sun's recently launched "stUSDT", a variant of USDT that Sun claims is backed by government bonds. Cochran alleges that the stUSDT does not have sufficient backing, which further compounds the potential risk.
Cochran also pointed out that certain Huobi and Tron executives are reportedly under investigation by Chinese authorities, a development that has fanned the flames of these allegations. These apprehended individuals reportedly include key personnel from both organizations, adding more credibrility to the concerns about Huobi's financial stability.
Huobi has denied any wrongdoing and maintains that all operations are running normally. However, Cochran dismissed these assertions, stating that his source, a senior executive at Tron, confirmed that team members are indeed under investigation due to actions related to Huobi.
Cochran's analysis, if accurate, paints a worrying picture for Huobi's financial health, adding fuel to rumors of the company's potential insolvency. If Huobi users begin to lose faith in the exchange's financial stability, it could lead to a mass exodus from the platform and significant upheaval in the crypto market.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
