The virtual coin, known as HT, rapidly halved in price at one point on Thursday before paring a chunk of the losses, data from CoinGecko show. It’s down 21% over the past 24 hours amid a wider tumble in crypto and equity markets.
Forced liquidations of highly leveraged bets “caused traders to fear the solvency of the Huobi exchange,” said Hayden Hughes, co-founder of social-trading platform Alpha Impact.
Sun, an adviser to Huobi, tweeted that the exchange and its crypto wallets are safe. He said Huobi is setting up a $100 million fund to bolster liquidity and added the exchange “will bear all leverage-through position losses on the platform” that came about because of the recent volatility in HT.
#Huobi will bear all leverage-through position losses on the platform resulted from this market volatility event of #HT.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) 1678419836000
Crypto analytics company PeckShield tweeted that blockchain data showed a wallet linked to Sun moved $100 million of the stablecoin USDC to Huobi.
The FTX exchange’s collapse last year left the digital-asset sector on edge about the health of remaining platforms. The nervousness is part of a wider crisis of confidence in crypto, which is reeling from a rout in token prices, other blowups, and an intensifying US regulatory crackdown.
People familiar with the matter earlier told Bloomberg News that Sun, 32, is the majority shareholder in Huobi. He’s denied owning a roughly 60% stake. He has said that he’s the biggest holder of the HT token and, in response to a request for comment, added that his holdings haven’t changed.
Sun is the founder of the Tron ecosystem, whose native coin TRX is a top-20 digital asset by market value. TRX is down about 12% in the past 24 hours, according to CoinGecko.
HT and TRX combined account for almost half of the Huobi exchange’s total asset reserves, according to DefiLlama.
Transaction data indicates more than $2 million of HT tokens were sold on Huobi in the span of a few minutes Thursday ahead of a slump in the coin’s price, said Riyad Carey, research analyst at digital-asset data provider Kaiko. Subsequently, several large buy orders helped HT recover some losses, he said.
Sun also transferred about $100 million worth of stablecoins to Huobi in January to support the exchange after it was hit by a wave of withdrawals. Around the same time, Huobi said it was planning to lay off 20% of its workforce, part of a wave of job cuts in the crypto industry.