Withdrawals and Layoffs at Huobi Spark Concern
Solvency Fears Mount At Yet Another Centralized Exchange
By: Owen Fernau •Byte
Alongside a slew of rumors, a spike in withdrawals from Huobi, a top-ten crypto exchange by volume, are raising doubts that yet another centralized exchange is on shaky financial footing.
Blockchain analytics firm Nansen highlighted that almost $61M in assets had left the platform on Jan. 6. That represented over 64% of the value withdrawn from the exchange in the past week, indicating a steep acceleration in the pace of withdrawals.
The withdrawals came after a Jan. 5 post from Block Media, a Korean media site, which said that internal employee channels had been closed at the company.
Adding to the evidence that the company may be in dire straits, Reuters reported on Jan. 6 that Huobi plans to lay off 20% of its staff.
As news of the layoffs broke, Justin Sun, the founder of the Tron blockchain who reportedly acquired the exchange in October through a related investment firm, transferred $100M of stablecoins to Huobi.
“Might be to help with the increased withdrawals or maintain a level of confidence in the exchange,” Martin Lee of Nansen posted on Twitter.
When FTX, formerly one of crypto’s largest and most recognizable exchanges, collapsed in November, it compelled large-scale scrutiny of every company responsible for holding users’ assets. Binance, the largest crypto exchange, was no exception.
CZ Strives to Show Binance is Different From FTX
Binance Begins Disclosing Wallet Assets in Transparency PushThe Defiant
While Huobi isn’t quite at the scale of FTX or Binance, the exchange’s potential insolvency would certainly be a blow to those holding assets with the company.
Huobi is also similar to FTX in that it has a token, HT, linked to it. The token, which has a $768M market capitalization, is down over 6% on the week.
HT Price. Source: Coingecko