$209 Million Boost for Huobi: Justin Sun and Blockchain Enterprises Extend Support

In the past few weeks, there have been rumours in the cryptocurrency world about the possibility of Huobi Global being in trouble. The rumours recently became louder after crypto entrepreneur, Justin Sun, sent shockwaves through the crypto world by injecting $209 million into Huobi. 

The injection created the impression that Sun was trying to bolster the exchange’s dwindling reserves. The falling reserves have raised familiar concerns about the platform’s viability. While the injection has boosted Huobi’s reserves to nearly $300 million, some traders still worry about the exchange’s health.

So, should you also be worried, or there’s no cause for alarm? We’ll answer your questions in this article. 

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Sun’s Denial

On Tuesday, August 8, 2023, a whale deposited large amounts into Huobi. The whale transferred 5,000 Ether (ETH), worth $9.15 million, and $200 million of Tether Holdings’ USDT to the exchange. The deposits boosted Huobi’s holdings of Ether and USD. 

Following the transactions, Blockchain security firm PeckShield disclosed that a crypto wallet it identified with links to Sun made them. However, the crypto investor quickly denied making the transfer.

In a Telegram message, he said, “I have no comments on common users and market makers [Who] deposit their funds into [Huobi] exchange”. A Huobi spokesperson also followed up, saying the wallet address where the transfers came from did not belong to Sun, who calls himself an “Adviser” to the exchange. 

The address is TDvf1dSBhR7dEskJs17HxGHheJrjXhiFyM. PeckShield and blockchain analysis platform Arkham Intelligence found that JustLend, a decentralised crypto lending platform on Sun’s Tron blockchain, is the source of the USDT infusion, enhancing speculations that the $209 million came from him. 

Sun’s Past Support for Huobi

While Sun denies making the $209 million transfer, it’s difficult to take his word for it considering he has injected a similar amount into Huobi before. In January, the crypto investor transferred about $100 million worth of stablecoins to the exchange. 

There was no denial then, with Sun saying the transaction showed his confidence in Huobi. “It just shows the confidence in Huobi exchange. It’s just my personal funds,” he said in a Telegram message. 

Moreover, Sun has a personal commitment to ensure the exchange’s survival. In November 2022, Bloomberg News reported that he paid about $1 billion to acquire a roughly 60% stake in Huobi, but he denies owning the majority stake.

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Huobi’s Financial Struggles

Before Sam Bankman-Fried’s FTX unravelled in November, traders started withdrawing funds due to concerns about the exchange’s viability, quickly causing its reserves to plummet. There have been similar concerns about Huobi in recent weeks as the exchange saw its reserves fall, and this is no case of crypto winter. 

According to data compiled by researcher Nansen, the whale transferred the funds after Huobi’s reserves had fallen by $33 million over 24 hours. Moreover, the exchange’s USDT reserves shrunk in the weeks leading up to the fund transfers. 

In the last 12 months, HT, Huobi’s native crypto token, has fallen 41%, doing little to calm nerves. While the latest significant transfer pushed the exchange’s USDT reserves to $282 million, it’s unclear whether it will help restore confidence and halt outflows. 

Huobi’s Alleged Trouble with the Police

Huobi’s struggles have been linked to reports that some of its senior executives and personnel from Sun’s Tron were under police investigation in China. There were even reports that police made some arrests.

But a Huobi spokesperson said the reports are false, saying none of its team members was arrested. The exchange said it had requested “all original sources of misinformation”, to retract or correct their statements. 

It also warned traders and investors to ignore FUD (Fear, uncertainty, and doubt), saying the platform is “operating as usual.” 

Separately, Sun, a Huobi’s global advisory board member, asked observers to trust in the exchange’s vision. 

“#TRON and #Huobi will thrive through continuous development,” he wrote on X, the social media platform previously known as Twitter. “Trust in our vision and community efforts for a stronger future”. The fund transfers came after both statements.

Also Read: 6 Bitcoin Alternative Cryptocurrencies That May Go Mainstream in 2023

Conclusion

No doubt, Huobi Global has been struggling for months now, and reports of a police investigation have been more bad news for the platform. The reports have made some traders question its viability as reserves continue to fall. However, the recent $209 million transfer into the exchange has bolstered its reserves and given it some space to breathe. 

While Sun denies making the transfers to boost Huobi, some investors believe that there may still be trouble in sight. The exchange has sought to calm its investors and traders, saying operations are normal. Huobi will need them to quickly believe the appeal to get back on track. Moreover, there will be cover another interesting topic about crypto – Binance Achieves Crypto Exchange Licence in El Salvador

Frequently Asked Questions

Why Did Sun Inject $209 Million Into Huobi?

The most obvious reason is to boost the exchange’s dwindling reserves, but there have been rumours that Sun may be diversifying his portfolio holdings. It is a common practice among high net-worth people within the crypto ecosystem.

Will the Funds Injection Help Huobi?

When a crypto exchange loses funds from its reserves, it’s always good to have significant inflows like the $209 million Huobi received. However, it may also confirm the fears of some traders that the exchange is in trouble. Nevertheless, these transactions should help if Huobi manages to get rid of the FUD from the arrest rumours.

Should I Take My Coins Away from Huobi?

There is no need to panic now as there is still no concrete confirmation that Huobi is in trouble.