Crypto exchange Huobi saw $94 million worth of withdrawals last week as rumours around its potential insolvency made the rounds on social media.
According to data from Nansen, Huobi saw a sharp uptick in net outflows last Friday, particularly from wallets with large balances.
— Nansen 🧭 (@nansen_ai) January 6, 2023
The increased rate of withdrawals may have stemmed from fears around the exchange’s solvency after Justin Sun, who reportedly acquired the exchange through an investment firm in October, shut off employees’ internal communication channels on Jan. 5, as per a report from media publication Block Media.
A Twitter account “BitRunX” also alerted users to Sun’s shutdown of internal communication channels, warning them that Sun had attempted to dissolve the company itself. Another Twitter user “supran25562746” commented on BitRunX’s tweet, saying that the internal team was already on strike, and employees were considering how best to protect their rights.
The speculation around the fate of employees, and Huobi’s potentially delicate financial situation, comes after a report from Chinese reporter Wu Blockchain who disclosed that Huobi employees were notified that their salaries would be paid in USDT or USDC.
Justin Sun's HR is communicating with all Huobi employees to change the salary form from fiat currency to USDT/USDC; employees who cannot accept it may be dismissed. The move sparked protests from some employees. Exclusive https://t.co/QB4sjDyHc7
— Wu Blockchain (@WuBlockchain) January 4, 2023
On Jan. 6, Reuters reported that Huobi plans to cut 20% of its workforce. Nansen analyst Martin Lee found that Sun deposited $100 million worth of stablecoins from Binance on to Huobi after news of the layoffs were made public. On-chain data from 0xScope showed that Sun had also cashed out $1 billion worth of USDC and BUSD since November – something Sun later claimed was an “on-chain swap operation.”
🟡 Justin's $1.1B withdrawal:
– It was speculated that this was used to fund Huobi's operations
– Likely untrue, the amount is way too large to cover burn rate
– Even Twitter running at its most wasteful state only burns at $4mil/month
– Whispers of him cashing out
— Rock 🪨 (@DataaRocks) January 6, 2023
In a series of tweets on Sunday, Sun said he had reflected on how his communications with Huobi had not gone well over the weekend, and announced a user experience advisory committee to hear user concerns and a Huobi open day for staff to communicate with opinion leaders.