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HTX $256 Million in Withdrawals Raises Trust Concerns for Former Huobi Exchange

Last Updated December 11, 2023 11:53 AM
Teuta Franjkovic
Last Updated December 11, 2023 11:53 AM

Key Takeaways

  • $256 million flowed out of HTX within weeks after it resumed operations following a November hack.
  • Justin Sun also faces scrutiny for hacks on Poloniex and Heco Bridge.
  • The SEC’s accusations of market manipulation against Sun further complicate the situation.

TRX has become the focal point of fraud allegations against its founder, Justin Sun, in the United States. In  March, the United States Securities and Exchange Commission (SEC) accused Sun and his firms of engaging in market manipulation to create the appearance of active trading. Sun responded  to the lawsuit on Twitter, stating that it “lacks merit.”

Now, the HTX exchange is grappling with the withdrawal of over $256 million  following a major hack, triggering security and trust concerns within the cryptocurrency realm.

$256 Million Withdrawal Surge Raising Exit Scam Fears

The outflows occurred when HTX, previously known as Huobi and associated with Justin Sun, resumed operations after falling victim to a substantial hack in November.

Between November 25 and December 10, $256 million was withdrawn  from HTX, according to Defilama data. This withdrawal surge highlights the unease and apprehension among certain clients in the aftermath of the security incident.

HTX did not immediately respond to a request for comment.

HTX reserves
Credit: Bloomberg/DefiLlama

The hack resulted in HTX losing $30 million worth  of cryptocurrency tokens, leading to a temporary suspension of withdrawals and deposits. HTX assured its user base that a thorough investigation would be conducted, and full compensation for losses from the hot wallet would be provided. Despite this, the crypto community remains vigilant.

From Major Hack to Major Outflow, Can Sun Salvage the Exchange?

Justin Sun is also reportedly linked to Poloniex and Heco Bridge, both of which experienced hacks in November. Approximately $200 million worth of crypto was stolen, with $86 million drained from Heco Bridge alone. These security breaches have heightened suspicions within the cryptocurrency community, with concerns that they could be part of an exit scam.

The TRX token, launched by Sun, is now under scrutiny for potential fraud. The Securities and Exchange Commission (SEC) has previously accused Sun and his firms of market manipulation.

Following the security breach, Justin Sun has committed to providing full compensation and additional rewards to affected users. This effort is geared towards rebuilding trust and encouraging more participation in Tron’s network. Notably, the majority of HTX’s reserves consist of Bitcoin and TRX tokens , aligning with Justin Sun’s Tron blockchain projects. However, concerns about the exchange’s security persist, as security firm BlockSec grapples with resolving the November breach and recovering the stolen assets.

Concerns Mount over HTX’s Security and Transparency

As HTX, with an average daily trading volume of $1.6 billion, grapples with the aftermath of the hacks, digital asset investors are on high alert. Doubts about the security and integrity of HTX have arisen, especially as it was revealed that HTX’s reserve consists mostly of Bitcoin and TRX.

Security firm BlockSec has reported that, despite HTX recovering $8 million from the stolen funds in September, the hackers still control the $30 million taken in the recent breach, even with HTX offering a 5% bounty. The cryptocurrency community remains watchful as developments unfold, underscoring the importance of robust security measures and transparency in the ever-evolving landscape of digital assets.

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