The Huobi exchange could soon find itself in a state of insolvency, according to a crypto analyst. The culprit is CEO Justin Sun, who is using the majority of Huobi’s customer funds for personal gain. Some of the platform’s managers have already been arrested in China as part of a wide-ranging investigation. This affair could shake up the crypto ecosystem after the collapse of FTX last year. Huobi users should exercise caution.
Huobi exchange in turmoil
The Huobi exchange, which wanted to be the saviour of FTX a few months ago could find itself in a similar situation. Indeed, in a series of tweets, the crypto analyst Adam Cochran announced that Huobi may, in fact, be insolvent.
According to Adam Cochran, Justin Sun, the CEO of Huobi uses most of the exchange’s customers’ funds for his personal activities.
To this end, Justin Sun uses stUSDT, a token based on U.S. Treasuries with a yield of 4.29%, which Justin takes advantage of by exchanging Huobi customers’ USDTs without their knowledge. What’s more, he doesn’t pull any punches, as blockchain data shows that 98% of exchanged tokens go undetected into Justin Sun’s and Huobi’s wallets.
Of the 631 million USDT Huobi claims to hold, the platform only has 90 million, estimates Adam Cochran.
Customer funds deposited in Ethereum (ETH) on Huobi suffer the same fate. They are clandestinely converted into stETH and flow automatically into the personal accounts of Justin Sun. Of the 141,000 ETH allegedly kept on Huobi, nearly half is held by Justin Sun, alerts Adam Cochram. So, according to Adam, if the customers of Huobi withdraw their ETH and USDT, Justin Sun’s platform is sure to default.
Huobi executives arrested in China
Serious accusations about the management of Huobi by Justin Sun come at the wrong time… According to the Hong Kong media Techub News, at least three Huobi leaders were arrested by Chinese police.
It is not yet clear whether these arrests are directly linked to the events reported by Adam Cochran. However, Techub News reports that the arrests are part of an investigation into labor, research, development and finance. According to the same source, some employees are leaving the country after receiving an emergency notice.
Huobi has yet to respond to Adam Cochran’s accusations and the arrests in China. CEO Justin Sun has also remained silent. However, it’s important that Huobi users exercise caution. If you’re still holding your funds on Huobi, it’s a good idea to get them out. One of the interesting alternatives available to you is, of course the decentralized D’Cent wallet, which we have we recently told you about. Remember, without your keys, you don’t have your coins.
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