Key Takeaways:
- Huobi Token crashed and partially recovered in the span of aroud 15 minutes.
- Rapid withdrawals raised fears of insufficient liquidity.
- Justin Sun says the funds on the exchange are safe, but injected $100 million in stablecoins onto the platform.
YEREVAN (CoinChapter.com) — Justin Sun, the founder of the Tron blockchain, poured $100 million into Huobi Global’s liquidity fund after the exchange suffered a drastic price manipulation attack on its platform.
Huobi Global stirs fears of FTX-like collapse.
Huobi’s native token of the same, trading under the ticker HT, fell by about 75% to $1.88 within five minutes on March 9 in what appears to be a “flash crash.” Flashes crashes reflect abrupt and extreme price moves in the market, helped by poor liquidity management and extreme price manipulation.
Also read: Jerome Powell Speaks Against Harsh Crypto Crackdown Before US Senate.
The downside move caused $2.55 million worth of long liquidations, according to data tracked by Coinglass. Hayden Hughes, co-founder of the social-trading platform Alpha Impact also commented that “forced liquidations of highly leveraged bets” caused traders to fear for Huobi’s solvency.
In the wake of the flash crash, Justin Sun tweeted that all the funds on the exchange were “SAFE.”
That $100M Emergency Pill
Meanwhile, despite the funds being “safe” on the platform, Sun said Huobi was setting up a $100 million fund to bolster liquidity and added the exchange “will bear all leverage-through position losses on the platform.”
Also read: The Rise and Fall of Silvergate, Once Crypto Market’s Favorite Bank.
Early on March 10, Sun withdrew $80 million worth of stablecoins from the exchange, 40 million USDT, 20 million USDC, and 20 million USDD. The crypto mogul then deposited the noted amount of USDT and USDC to Aave and JustLend.
Sun then transferred $100 million in USDC stablecoins to the exchange after the Huobi crash.
People familiar with the matter earlier told Bloomberg News that Sun is the majority shareholder in Huobi.
He has previously said that he is in fact, the biggest holder of HT tokens but has denied owning a roughly 60% stake in the exchange. Moreover, Sun is also the founder of Tron, and TRX tokens, combined with HT, account for almost half of the Huobi exchange’s total asset reserves.
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