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(Kitco News) -
Justin Sun, founder of the Tron network and a Global Advisor at the Huobi cryptocurrency exchange, said people should ignore the ‘fear, uncertainty, doubt’ surrounding the exchange after reports of the arrest of senior executives by Chinese government authorities sparked over $60 million in outflows in two days.
“Ignore FUD, keep building! #TRON and #Huobi will thrive through continuous development,” Sun wrote in a Twitter post late Sunday night. “Trust in our vision and community efforts for a stronger future. Perseverance guarantees success!”
Crypto markets began to react after Chinese crypto reporter Colin Wu posted a series of tweets early on August 5 claiming that Chinese police had detained and investigated many senior executives of “offshore” crypto exchanges.
“Recently, a large number of senior executives of offshore cryptocurrency exchanges, such as CTO CHO, have been detained and investigated by the Chinese police for allegedly providing fund payment and settlement services for gambling websites,” Wu wrote. “According to Bitrace research, online gambling funds transferred directly or indirectly to offshore exchanges in the past year have exceeded 7.6 billion USDT. At present, the major offshore exchanges are all founded by Chinese. Their founders are located in Dubai or Singapore, but most of their employees are located in China.”
This description fit the profile of Singapore-based Huobi Global, which was founded by Chinese national Leon Li and is the fourth-largest cryptocurrency exchange in the world and the largest exchange in China. Last October, Li sold his entire majority stake in the crypto exchange to About Capital, a Hong Kong-based investment firm led by Justin Sun, and Sun was added to Huobi’s advisory board soon afterward.
About two hours later, local Chinese media outlet Techub corroborated Wu’s post, tweeting that at least three Huobi executives had been arrested, and that some of the exchange’s employees were sent an urgent notification advising them to depart China as quickly as possible.
Following the reports, Huobi saw outflows totalling $64 million over the weekend. According to data from DefiLlama, the total value locked (TVL) on the exchange has declined from $3.13 billion at the beginning of July to $2.46 billion at the time of writing, representing a drop of over 20%.
The data also showed that Huobi’s stablecoin reserves have fallen by 34% in the past week. Adam Cochran of Cinneamhain Ventures related the selloff of the USDT stablecoin over the weekend to the news about Huobi.
“So why is Tether selling off? Likely Huobi insolvency,” he tweeted. “-Binance started selling off USDT in bulk. -We found out that Huobi execs (and Tron personnel questioned by police) -This is not long after Sun's stUSDT launch -And weird balance shifts at Huobi in the last month.”
Shortly afterward, a spokesperson for Huobi responded to Cochran’s post with denials of all the reports, leading to an awkward exchange for the exchange.
