It all started with FTX's bankruptcy, then came regulatory crackdowns on the largest CEX exchange Binance, information leaks from the SEC claiming that cryptocurrencies other than Bitcoin are "securities", and now we're seeing troubling signals from another major exchange, Huobi. What's going on over there?
Lately, there has been a lot of negative news circulating about Huobi in the crypto community. However, there are no immediate critical emergencies at the moment, and Huobi is not facing the same problems as FTX. Nevertheless, it's always wise for crypto investors to stay informed about the latest developments, especially when it comes to one of the largest centralized crypto exchanges. Huobi is known for its significant trading volume and is ranked second in terms of visitors, just behind Binance, according to Coinmarketcap.
In December 2022, news surfaced about Huobi's reduction in staff by 20%. This is a common practice among crypto startups during prolonged downtrends, as it helps to alleviate the financial strain by cutting payroll expenses. Numerous other exchanges and companies have also implemented similar measures.
In February 2023, Huobi announced the discontinuation of its Cloud Wallet service (a key component of the iToken DeFi portal) and the complete scrapping of the project. The reason cited for this decision was low demand and "strategic adjustments." These moves have raised concerns among crypto investors about Huobi's future and whether the exchange is grappling with larger issues.
Recently, it has been reported that Huobi will be shutting down its own NFT platform in May. Then, in the early hours of March 10th, an unusual event took place involving the native HT token of Huobi. Within a few minutes, the token experienced a drastic drop of over 93% in value, followed by an impressive surge of 1200%, resulting in a significant recovery of its losses and a price increase from $0.31 to $4.
Pump&Dump of HT token on Huobi
The unusual activity and potential manipulation of Huobi's native token on its main exchange have understandably raised concerns among the platform's users.
Some speculate that this may be linked to the simultaneous decline of Bitcoin, which saw its value drop from $22,000 to $20,000. Others point to Huobi itself, suggesting that such manipulation may have allowed the exchange's owners to profit from the liquidation of positions held by both long and short traders.
One of the platform users' tweets on this matter.
Officials of the Huobi exchange have denied any involvement of the platform in the executed Pump&Dump scheme with their native token.
According to well-known Chinese journalist and blogger Colin Wu, who cited one of the Huobi founders, Justin Sun, the reason for the manipulative movement of the coin was the large-scale "dumping" by several "whales."
Justin Sun has indeed confirmed the incident and issued an apology for it in a tweet. He attributed the manipulative movement of the token to the actions of a few users on the market causing liquidations. He also announced that the exchange will establish a $100 million stabilization fund to improve the platform's multi-currency liquidity.
Tweet from Huobi founder Justin Sun on this topic.
Later, he announced that the necessary funds had already been secured and $100 million worth of USDC had been transferred to Huobi Global to stabilize the situation. However, it's unclear how this will help traders whose deposits were liquidated as a result of the Pump&Dump scheme.
Many users of the platform speculate in chatrooms and forums that the exchange itself may have been involved in the manipulation, using multiple market makers. They also suggested that the creation of the stabilization fund could be seen as a mere token gesture in response to the negative PR.
Previously, Justin Sun announced the relocation of Huobi's headquarters to Hong Kong and promised to make HT and TRX tokens market leaders in the near future. Unconfirmed reports suggest that they had to apply for a license in Hong Kong twice, with the first attempt being unsuccessful, but it appears that these plans are on track. However, despite Huobi's active promotion of FOMO sentiments, recent events have left users with surprises.
There are indications that another round of high-risk trading with excessive leverage has taken place, with some users eagerly anticipating big wins in the FOMO-positive atmosphere. Why would Justin Sun want any unnecessary passengers on his journey to the moon?
Traders on the Huobi exchange should exercise caution and stay vigilant, as there have been numerous negative events associated with the exchange lately that raise concerns. Another high-profile bankruptcy would be highly undesirable, especially considering that many are still recovering from the FTX crash and the constant FUD attacks from regulators, which have delayed the start of the next bull run in the crypto industry.
