In the world of cryptocurrency, flash crashes are not uncommon, but they can be alarming for investors and traders who may worry about the solvency of exchanges. Recently, one of the largest trading venues in digital assets, Huobi, experienced a flash crash in its native token, HT, causing concern among traders.
However, China-born crypto mogul Justin Sun, an adviser to Huobi, has sought to allay these fears by injecting $100 million into the exchange to bolster liquidity. In a tweet, Sun reassured investors that Huobi and its crypto wallets are safe and that the exchange will bear all leverage-through position losses that came about because of the recent volatility in HT.
The move by Sun has been seen as an attempt to counter concerns about the strength of the Huobi exchange after the flash crash. Forced liquidations of highly leveraged bets reportedly caused traders to fear the solvency of the exchange. Sun’s injection of funds is intended to provide a safety net for traders and reassure them that Huobi is a safe place to invest their money.
According to blockchain data analytics company PeckShield, a wallet linked to Sun moved $100 million of the stablecoin USDC to Huobi. This injection of funds is expected to help stabilize the exchange and provide traders with the confidence they need to continue trading on the platform.
The move by Sun comes amid a wider crisis of confidence in crypto, which is reeling from a rout in token prices, other blowups, and an intensifying US regulatory crackdown. Last year, the collapse of the FTX exchange left the digital-asset sector on edge about the health of remaining platforms. Sun’s injection of funds into Huobi is seen as an attempt to avoid a similar situation occurring at Huobi.
Sun, who is the founder of the Tron ecosystem, has denied owning a roughly 60% stake in Huobi, but people familiar with the matter have told Bloomberg News that he is the majority shareholder. Sun’s holdings of the HT token have not changed, and he remains the biggest holder of the token.
HT and TRX, the native coin of the Tron ecosystem, combined account for almost half of the Huobi exchange’s total asset reserves, according to DefiLlama. TRX is also down about 12% in the past 24 hours, according to CoinGecko.
In conclusion, the recent flash crash in Huobi’s native token has caused concern among traders, but Justin Sun’s injection of $100 million into the exchange is expected to provide a safety net for investors and traders. The move is seen as an attempt to counter concerns about the strength of the exchange and avoid a similar situation to the collapse of the FTX exchange last year. Sun’s move has provided traders with the confidence they need to continue trading on the platform, and it remains to be seen how the crypto market will respond to this development.