Unexpectedly, notable Dogecoin creator and supporter Mishaboar called on the community to remove their DOGE holdings from Huobi amid growing worries about the exchange’s financial stability. In response to concerns over Huobi’s reserves, the contributor issued a warning that the highly praised proof-of-reserves idea, which exchanges frequently deploy as a demonstration of their financial soundness, might be deceptive and fail to reflect an exchange’s actual liabilities.
What about Huobi?
Crypto enthusiast Adam Cochran first raised the red flags when he put together a series of troubling signs pointing to Huobi’s precarious financial state. His thorough investigation revealed significant USDT sell-offs by Huobi immediately after Justin Sun of Tron’s contentious stUSDT debut, along with strange balance adjustments. The authenticity of the new stablecoin was questioned since statistics revealed a disproportionate distribution of tokens, most of which were controlled by Sun and Huobi.
The effects of Huobi’s possible bankruptcy go beyond Tether-specific issues. There are claims that Huobi user monies were allegedly used to power Sun’s DeFi businesses, notably JustLend. Cochran continued by pointing out a striking mismatch between Huobi’s claimed wallet balances and the real assets stored, raising questions about the legitimacy of the exchange.
The current state of affairs is unknown, and market participants are expecting more information. Due diligence and cautious decision-making are extremely important, since the once-trusted reputation of Huobi now faces a major credibility problem as a result of these discoveries. However, in unknown circumstances, the age-old maxim “not your keys, not your crypto” cannot really be beaten.
