Rumours about Huobi executives being arrested in China made the rounds following a report published by financial media in Hong Kong.
On 5 August, Chinese Reporter, Colin Wu of Wu Blockchain, posted a tweet saying that recently, a large number of senior executives of offshore cryptocurrency exchanges, such as CTO CHO, have been detained and investigated by the Chinese police. This is being done for allegedly providing fund payment and settlement services for gambling websites.
However, a spokesperson from Huobi has denied the reports of executives being arrested in the country. On the flip side, Hong Kong media Techub NEWS claimed to have learned from two different insiders that at least three executives were taken away by the Chinese police.
As reported by the Hong Kong media, this has been for the investigations involving manpower, research and development, and finance. Some employees have also reportedly received an urgent notice to leave the country as soon as possible.
Currently, outflow from the exchange has also been picking up as traders have withdrawn 49 million in stablecoins over the last week. As per DeFiLlama, the platform currently has a balance of approximately $2.5billion. The same figure stood at $3.1bn at the start of this year.
Some large chunks of the exchange’s holdings are from tokens that are connected to the Justin Sun universe of companies and protocols. As per on-chain data, 26.5% of these holdings are in $TRX, which is TRON’s native token, while 20.32% of the holdings are in $HT, which is Huobi’s exchange token.
Back in March, the U.S. Securities and Exchange Commission (SEC) filed charges against Justin Sun and three of his companies. The regulatory watchdog accused the entities for the unlawful offering and sale of crypto asset securities, specifically Tronix ($TRX) and BitTorrent ($BTT). Sun and his companies were also targeted for allegedly manipulating the $TRX secondary market by wash trading.
Huobi, on the other hand, also faces challenges in jurisdictions other than China. The enforcement actions of the Malaysian securities regulator had forced the exchange to close its business in the country in May this year.
The Chinese brand name Huobi Global was abbreviated to ‘Huobi’ on 22 November 2022, as announced by the official website of Huobi Global. While multiple people associated with it have refuted the recent arrest claims, panic in the market has resulted in continued decline in the Huobi stablecoin reserves since the last week.