As the bank run on Huobi intensifies, Justin Sun sent $100M in USDT and USDC from Binance to Huobi. It’s unclear if the money is intended to quell the FUD or if Huobi doesn’t have enough reserves to back all its deposits.
Huobi is one of the world's largest centralized crypto exchanges, but it's more popular outside the US market.
Sun is the controversial billionaire founder behind the Tron blockchain and the USDD stablecoin, which has struggled to maintain its peg to the US Dollar for the last few months. Sun is officially an advisor to Huobi, but he's believed by many to be in charge of operations at the exchange.
Why Is There So Much Huobi FUD?
To me, it seems like the Huobi FUD is based on lots of small crises adding up to a bank run at the exchange.
We all knew Huobi's reserves would be tested at some point following the FTX collapse because Huobi mints its own token too. And like FTX, Binance, and Crypto.com, Huobi finally got its bank run: over $90M in stablecoins left the exchange over the last week–and $61M of that happened in the last 36 hours. It's apparently getting so bad that Sun had to inject $100M into Huobi.
Sun's other projects aren't exactly doing great, and with his USDD stablecoin constantly de-pegging, investors may be concerned that all of Sun's projects could collapse at once.
Huobi's business seemed vulnerable over the last couple weeks as news leaked about employee unrest. Sun denied that Huobi would be laying off employees, but now the exchange is apparently cutting 20% of its staff.
Huobi workers were also told their salaries will be paid in stablecoins going forward. This was probably very upsetting to Huobi employees, but we can't know because Huobi leadership disabled most of Slack channels used by the affected employees.
Sun is still claiming everything at Huobi is fine, but as the bank run intensifies we'll see how many more $100M injections Huobi gets from Sun's Binance account before the billionaire cuts his losses and lets Huobi collapse.