Cryptocurrency exchange Huobi is currently facing a series of challenges. Amidst circulating rumors regarding its solvency, the exchange witnessed outflows amounting to $64 million between August 5th and 6th. This led to a significant drop in its total value locked (TVL), which now stands at $2.5 billion, a decrease from $3.09 billion on July 6th. These rumors were further fueled by speculations that Chinese authorities were investigating Huobi's top executives. Initial rumors suggested that the exchange's leadership had been arrested in China on August 4th, in connection with an alleged investigation into the exchange's association with gambling platforms. However, a Huobi spokesperson dismissed these claims as baseless.

Further concerns arose when Adam Cochran, a fintech executive and angel investor, highlighted potential solvency issues faced by Huobi. Cochran pointed out inconsistencies in Huobi's Tether (USDT) holdings, suggesting that the exchange might be insolvent. On-chain data from DefiLlama revealed that Huobi held less than $90 million in assets across USDT and USD Coin (USDC) on August 5th. However, Huobi's latest audit report claimed that its users held $630M in USDT, with a wallet balance of $631M USDT. Cochran concluded that "Huobi is deeply insolvent."

In addition to these challenges, Huobi has faced regulatory issues in other countries. For instance, an enforcement action by the Malaysian securities regulator led to the closure of Huobi's operations in Malaysia in May.