The cryptocurrency industry is no stranger to volatility. Still, Huobi’s recent flash crash of its Huobi Token (HT) sent shockwaves through the market.
The crash caused the token’s price to drop an astounding 90%, catching many crypto traders off guard. In response, Huobi has set up a $100M liquidity fund to help stabilize the market and recover from the crash.
The funds have reached the exchange, and Huobi’s global adviser Justin Sun has confirmed the news. This is not the first time Huobi has taken action to protect its users and the market in response to volatile conditions.
The exchange has a strong track record of providing stability and security for traders.
Huobi Allocates $100 Million To Stabilize Abrupt HT Token Crash
Justin Sun, Huobi’s global adviser, backed up the $100 million liquidity fund announcement by indicating that the funds have reached the exchange. Sun asserted that the abrupt downfall of HT was by “a handful of users,” which triggered a flood of mandatory liquidations in the spot and HT contract markets.
Even so, he remarked that these changes resulted from market activity. Kaiko data analyst Riyad Carey stated that there were nearly $2M in sell orders and roughly $600K in buy orders five minutes before the crash.
Aside from this, the bigger crypto market also encountered a tremendous sell-off during the same period, leading to over $300M worth of long positions cleared out. Sun declared that Huobi plans to enhance its multi-currency liquidity with the $100M liquidity fund to prevent potential recurrences.
Furthermore, Justin Sun, the creator of Tron, guaranteed Huobi would assume all losses in leverage-based positions on the platform caused by the fluctuation of HT prices.
Protecting Its Users
The DeFiLlama data affirmed that Huobi had experienced money leaving its platform during the designated timeframe. The information gatherer reported that the exchange’s withdrawal amounted to $47.74M.
A recent surge of $87.22M into the exchange was attributed mainly to the $100M liquidity fund. According to Nansen, Huobi holds a total of $2.8B worth of digital assets, with its token, Huobi Token (HT), making up 26.61% and Tron’s TRX accounting for about 20%.
Huobi has been at the forefront of cryptocurrency innovation for years. The exchange’s quick action following the HT flash crash shows how serious they are about protecting its users and the market.