Huobi Unable to Withdraw $13.2M in Customer Funds From FTX

14 November 2022, 08:04 GMT+0000
Updated by Ali Martinez
14 November 2022, 08:12 GMT+0000
In Brief
  • Huobi Group subsidiary Hbit revealed that it had $18.1 million on FTX, none of which can be withdrawn.
  • $13.2 million belonged to customers, with the remainder belonging to Hbit.
  • The company has applied for a $14 million unsecured loan to cover customer losses.
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Huobi subsidiary Hbit has revealed that it has $18.1 million on FTX, which it cannot recover. $13.2 million were customer funds, which it will cover through an unsecured loan of up to $14 million.

Huobi announced that it is also a victim of the FTX scandal. It revealed in a notice that it was unable to withdraw $18.1 million from the now-bankrupt exchange. Of this, $13.2 million belongs to customers, with the remaining $5 million belonging to subsidiary Hbit.

Huobi also revealed that it had applied for a $14 million unsecured to help deal with the $13.2 million loss of customers, establishing a $32 million liability for the company. Huobi said that the stuck funds do not affect normal business operations. Hbit operates independently from other business entities of the Huobi Group, which are completely unaffected.

However, Huobi noted that it is not entirely safe for the company, with the notice stating,

“…the Board anticipates that the financial performance of the Group might be materially and adversely affected in the event that the Incident is not resolved. The Board will discuss with the Group auditor to discuss the impact of the Incident on the Group’s financial position.”

FTX filed for bankruptcy protection on Nov. 11, setting off widespread panic in the crypto market and causing prices to tumble. Many others are also unable to withdraw their funds.

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Community skeptical over Huobi transparency report

Crypto exchanges are coming under heavy scrutiny following FTX’s collapse. Reports emerged that FTX’s sister company, Alameda Research, had reserves that primarily consisted of FTX tokens (FTT), raising concerns. As such, exchanges have been hurriedly posting proof of their reserves.

Huobi is among them, publishing a transparency report that showed it had reserves of approximately $3.5 billion. About $900 million of this is in the form of Huobi tokens. Bitcoin, ether, Tether, and TRX made up the bulk of the reserves.

However, Huobi is now receiving flak over the report. Some users spotted a linked wallet sending 10,000 ETH to Binance and OKX. Some in the crypto community are accusing exchanges of manipulating funds.

Crypt.com and Gate.io under fire

Other exchanges are also publishing proof of reserves, but some are drawing concern from crypto community members. Crypto.com and Gate.io, in particular, have been receiving a lot of criticism.

The crypto community is accusing these exchanges of faking their reserves, pointing to a few transactions that moved ether around. Crypto.com responded, saying that the ETH transfers occurred three weeks ago and were returned to cold storage soon after. Then, it was sent to a whitelisted corporate account address.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.