Rumor about Huobi’s implosion and strong spike in activity of Justin Sun’s wallet raise questions
According to a series of recently occurred transactions, Justin Sun has received $200 million from the Binance exchange to his personal wallets. The flurry of transactions is happening while rumors about the problematic state of Huobi are rising in the background. Justin Sun is officially affiliated to Huobi.
Back in December, Justin Sun withdrew $1.1 billion from various exchanges, causing panic among some Huobi users and investors since the main rumor in the space was that Sun is using personal funds to back up the solvency of the cryptocurrency exchange.
🟡 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
The situation has been aggravated by the fact that Huobi China has fired and recontracted their staff to Huobi Global to ease up the existing pressure on the company. Additionally, all bonuses have been canceled and a large part of the staff has been laid off.
The aforementioned $200 million withdrawal from Binance only fueled speculations about the potential insolvency of Huobi. At the same time, spreading FUD would not be the most rational thing to do right now, considering the lack of evidence the thesis about Huobi bailing has underneath.
First of all, Huobi is not losing as much money as one might think. The amount withdrawn by Sun back in December is enough to help Huobi remain afloat for at least a few months. The $200 million withdrawn today would make the cryptocurrency exchange even more resilient, even though there is no need to do so.
The most likely reason could be tied to Sun’s desire to cash out some of his holdings in order to maintain more liquid, rather than bailing out a massive exchange with his personal funds.