Justin Sun transferred $100 million worth of USDC to Huobi for creation of a liquidity fund after native token HT price nosedived 93% on Thursday. Sun apologized to users for leveraged liquidation on the market caused by a few users and affirmed that Huobi’s operations are safe. Huobi token’s flash crash is a cause for concern among HT holders; advisor and TRON founder dismissed the event as market behavior.
Despite this, the exec assured that Huobi’s operations are safe and dismissed the incident as normal market behavior. Sun, who happens to be the biggest holder of the HT token, apologized for the market fluctuation caused by a “few users triggering a cascade of forced liquidations in the spot and HT contract markets.” The exec intends to set up a liquidity fund with an investment of $100 million for those impacted by the leveraged liquidation on the market. He also confirmed a transfer of $100 million in USDC stablecoin to Huobi.
In an update, Sun also revealed that Huobi is tasked with bearing all leverage-through position losses on the crypto exchange that transpired from this market volatility event of HT. Strengthening leverage risk warnings and liquidity capabilities are some of the areas that require attention, according to the exec, who also serves as an advisor to the crypto exchange.
In the minutes leading up to the crash, more than $2 million of HT tokens were sold on Huobi, according to the transaction data provided by Kaiko’s research analyst, Riyad Carey. Besides, Sun was reported to have moved $60 million in USDT from Huobi to Aave, which Nansen said could be unrelated to the event.
Now defunct FTX exchange’s native token FTT nosedived from $22 to $2 in less than five days. The collapse of the native token played a key role in FTX’s bankruptcy. Huobi’s native token declined from a 24-hour high of $4.81 to a low of $0.31 on Thursday.
The flash crash caused uncertainty among crypto market participants. HT price recovered from its decline and the native token of the exchange is trading at $3.79 at press time. Sun’s liquidity fund creation and assurance that the exchange will bear all leverage-through position losses on the platform could help fuel HT’s recovery.
The merger of Huobi and Poloniex has created a new crypto ecosystem that combines Justin Sun’s interests in both cryptocurrency exchanges. In the middle of the crypto winter, Sun combined the operations of the two exchanges and released a disclosure to employees on March 9. People close to the matter informed that multiple departments of Poloniex will be merged into Huobi Global including assets, markets and operations, product design, liquidity, customer service and compliance. All the assets will be transitioned to the Huobi brand.