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Justin Sun has offered an explanation about why Huobi's HT token crashed 93%, only to rebound just as quickly.
On Thursday, HT dropped from a 24-hour-high of $4.81 to as low as $0.31 over the span of 10 minutes at 9 pm UTC. Less than 30 minutes later, its price rebounded to $3.70 (a 1,093.55% increase). At the time of writing, HT is sitting at $3.90.
Sun has since taken to Twitter to offer his apologies and explanation about the crash, pointing to "simply a result of market behavior."
"The operation of @HuobiGlobal exchange is #SAFE, the wallets are SAFE, and the backend is SAFE. The recent market fluctuations and the leveraged liquidations were caused by few users triggering a cascade of forced liquidations in the spot and HT contract markets," Sun tweeted.
"Currently, all work is proceeding steadily and there are no unexpected incidents, and these fluctuations are simply a result of market behavior."
The operation of @HuobiGlobal exchange is #SAFE, the wallets are SAFE, and the backend is SAFE. The recent market fluctuations and the leveraged liquidations were caused by few users triggering a cascade of forced liquidations in the spot and HT contract markets.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 10, 2023
An hour later, the Huobi founder apologized for the blip, adding that the platform will be setting up a sizeable liquidity fund: "We deeply apologize for the impact of the leveraged liquidation on the market caused by a few users, and in order to further improve the multi-currency liquidity of the @HuobiGlobal platform, we will set up a liquidity fund with an investment of 100 million US dollars."
Read more: Hong Kong Proposes Plan for Retail Access to Crypto
"We will continue to improve the liquidity depth of main cryptocurrencies and HT token, strengthen leverage risk warnings and liquidity capabilities. Regarding this incident, we will keep the community updated on the follow-up progress."
We deeply apologize for the impact of the leveraged liquidation on the market caused by a few users, and in order to further improve the multi-currency liquidity of the @HuobiGlobal platform, we will set up a liquidity fund with an investment of 100 million US dollars.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 10, 2023
Sus behaviour
Whilst it's certainly not for us to tell you who or what to believe, but it would seem unlikely that a "few users" exerting "simple market behaviour" led to a sudden 93% crash and a subsequent 1,000%+ rebound.
Instead, other market participants have pointed towards more questionable behaviour surrounding the crash.
Read more: The Inside Story of Huobi's Heco-Peg Tokens
According to a Kaiko researcher, $2 million of sales on the HT-USDT pair were reported in the five minutes leading up to the crash, compared to the $600,000 it usually experiences.
In the 5 minutes leading up to the $HT crash there was $2mn worth of sales compared to just $600k of buys on the main HT-USDT pair on Huobi pic.twitter.com/Z6sbgugSit
— Riyad Carey (@riyad_carey) March 9, 2023
Meanwhile, Nansen highlighted Justin Sun withdrew around $60 million in Ethereum stablecoins from Huobi in the last 24 hours.
"Moving his funds to Aave - nothing really unusual maybe just the timing," Nansen tweeted, to which Sun replied, "it is just normal practice of fund deployment."
Justin Sun has withdrawn ~$60 million in ethereum stablecoins from Huobi in the last 24 hours pic.twitter.com/4PE4iimp9z
— Nansen 🧭 (@nansen_ai) March 10, 2023
It is just normal practice of fund deployment.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 10, 2023
Whilst there is nothing illegal about either of these instances, the timing of the events suggests there could be more than meets the eye.
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