Before we go into the details, here is a TLDR of the Huobi FUD.
After all the glitters of new year celebrations settle, has the contagion continued? This time, with another centralised exchange stealing headlines. A FUD surrounds Huobi, and I think it’s time we unpack them.
It all started with the news of Huobi cancelling all year-end bonuses for its employee and preparing a layoff of 1,200 people with a massive massacre in salary cuts of senior employees, as Wu Blockchain reports.
According to Reuters, Huobi plans to lay off about 20% of its staff, as mentioned by its CEO, his excellency Justin Sun.
This comes in a very PTSD manner, with concerns about solvency a pressing issue among various crypto exchanges after the collapse of FTX and a slew of bankruptcies in 2022.
Reporters claim that Justin Sun closed down all company communications following attempts to dissolve the company.
And there’s more.
Then came the ultimatum. The report on Justin Sun’s HR was communicating with all Huobi employees that their salary would be changed to USDT/USDC instead of fiat currency. “Employees who cannot accept it may be dismissed.”
While payment in stablecoins may be common throughout multiple protocols and web3 companies, the sudden switch amidst the current market condition may seem unusual.
Here’s the response from his excellency.
TLDR of his recent tweet,
- Huobi’s strong focus on tech and security has implemented several measures to ensure the safety of users.
- It utilizes cold storage for most of its digital assets; they are stored offline in secure, physically protected locations.
- Commitment to transparency, abiding by all laws the exchange operates in.
- They have a team who is in charge of user assets safety.
Justin Sun’s tweet above was derived after Huobi appeared to be having internal trouble. Here’s a quick recap of Justin’s history done by Cryptodamist.
Huobi performed a proof of reserves attestation a couple of months ago. Still, after several criticisms on how proof of reserves does not disclose liabilities or negative balances, Justin seems cooperative in doing a Merkle tree proof of reserves, which “reveals all” liabilities.
According to Nansen, exchange holdings for Huobi have fallen from $3.3B 2 months ago to currently $2.9B in the present day.
DeFiLlama also talked about the inflow of ~88M to Huobi on the 15th of December and, since then, experienced over $200M in outflows, with ~$75m occurring in the last 24 hours (as of the time of writing).
Justin’s personal fortune
According to investigative research by Arkham on Twitter, less than one month ago, there was a transfer amounting to $200M in stablecoins originating from Sun’s wallet.
Although his excellency claimed to support Binance by holding his funds there, on-chain data may suggest otherwise.
Justin Sun has also been active on-chain. During the last few days of the year, he was spotted paying $15K in slippage to swap and bridge stablecoins rather than redeeming them directly from TRON.
We read from Lookonchain about Justin’s recent transactions on-chain.
Coincidence with Silvergate?
But guess who else banks with Silvergate? Huobi. This does not look well for them, especially when reports that they could not meet payroll are also made public.
Sentiments in the market are all almost negative, and there seems to be a more significant correlation between the two entities, more than we know.
PI ARE SQUARED
Another FUD surrounding Justin is the rug of PI Network. Here is a complete thread to keep you up to speed.
TRON nose dive
Justin’s TRON $TRX has seen a plunge.
A chance for big longs and shorts
History has its way of teaching us lessons, which might be another. Based on the FTX dump due to its catastrophic news, there might be opportunities to take positions within the Huobi ecosystem chain.
This thread may give insights into how you may navigate by taking positions during this Huobi situation. This is not financial advice.
There is more than meets the eye, and more significant threats are detrimental to the state of crypto. Besides Huobi’s internal conflicts and employee layoffs, Silvergate capital shares dumping 42%, Genesis announced a massive wave of layoffs and DCG shitting down its wealth management division. These collective events may implode the market.
All the FUD may be true or not, but as they are not confirmed, the best thing you HAVE to consider is survival. By that, it’s better to be safe than sorry to get all your funds off centralized exchanges.
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
Featured Image Credit: Chaindebrief