Cryptocurrency exchange Huobi saw $64 million worth of outflows between August 5 and 6, following rumors that its solvency was under investigation by Chinese authorities and that its executives were under investigation. The weekend outflows caused the exchange’s total value locked (TVL) to drop from $3.09 on July 6 to $2.5 billion at the time of writing.

Rumors that the exchange’s leadership had been arrested in China first surfaced on Aug. 4 as part of an investigation into the exchange’s dealings with gambling platforms. Speaking to Cointelegraph, a Huobi spokesperson labeled the claims as fake news. The rumors surfaced amid reports that authorities are tightening control over cryptocurrency exchanges in mainland China.

Cointelegraph has learned that at least one C-level executive has left Huobi in the past few weeks, though it is unclear if the departure is related to the Chinese investigation. On social media platform X (formerly Twitter), Huobi’s head of social media said the rumors were untrue and that the exchange is “currently doing well.”

The source has been confirmed to be a senior executive at Tron who has first-hand knowledge of the investigation and has worked at Tron for many years. Whether you have been informed or not, your colleague is currently under criminal investigation.

— Adam Cochran (@adamscochran) August 6, 2023

The cryptocurrency exchange is also allegedly facing solvency issues. Fintech executive and angel investor Adam Cochran suggested in a series of posts that the company may be insolvent due to inconsistencies in its Tether (USDT) holdings.

Backed by on-chain data provided on DeFiLlama, Cochran noted that Huobi held less than $90 million in USDT and USD Coin (USDC) on August 5. However, the exchange’s latest “Merkle Tree Audit” lists “Huobi users holding $630 million in USDT, with a wallet balance of $631 million USDT,” the post reads. According to Cochran, “Huobi is seriously broke.

According to DefiLlama data on August 6, the total amount of USDT and USDC in Huobi wallets was only US$72 million.

Huobi did not immediately respond to Cointelegraph’s request for clarification on the bankruptcy rumors and the discrepancies between on-chain data and its audit report.

Huobi has also faced challenges in other jurisdictions. An enforcement action by Malaysia’s securities regulator forced the exchange to shut down its operations in the country in May.

Magazine: Deposit Risk: What Do Crypto Exchanges Really Do with Your Money?

Author: Deepchain DCNews

Compiled by: Sister Shen

Twitter: DeepChain

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