Crypto Mogul Sun Seeks to Reassure After Huobi Token Flash-Crash

Cryptocurrencies linked to China-born crypto mogul Justin Sun suffered some of the steepest falls in the latest digital-asset selloff, spurring questions about what triggered the drops.

The tokens, and TRX, sank 20% and 10% in the past 24 hours, data from CoinGecko shows. At one point, HT rapidly halved in value before paring losses. Those ructions compare with an 8% Thursday slide in the Bloomberg Galaxy Crypto Index, which includes Bitcoin, Ether and nine other coins.

HT is the native token of the Huobi exchange. Bloomberg News reported earlier, citing people familiar with the matter, that Sun is the majority shareholder of Huobi Global. He’s denied being the owner of a roughly 60% stake and his official position is as an adviser.  

Sun, 32, said earlier this year that he’s the biggest holder of the HT token. He is the founder of the Tron ecosystem, whose native coin TRX remains a top-20 digital asset by market value despite the recent swoon.

In response to a request for comment on HT, Sun said: “We are good. Just a user mis-sold its position and it is back to normal now.” On Twitter, he said the Huobi exchange is operating safely and attributed recent market fluctuations to “a few users triggering a cascade of forced liquidations in the spot and HT contract markets.”

Transaction data indicates more than $2 million of HT tokens were sold on Huobi in the span of a few minutes Thursday ahead of a slump in the coin’s price, said Riyad Carey, research analyst at digital-asset data provider Kaiko. Subsequently, several large buy orders helped HT recover some losses, he said.

Market watchers struggled to pinpoint specific causes of the HT slide outside of the large disposal and a wider bout of risk aversion that hit a range of assets.

Some pointed to speculation that Huobi and Poloniex, another crypto exchange, may have merged, triggering uncertainty. Sun denied that the two exchanges have combined. In November, the platforms announced a strategic cooperation partnership.

A regulatory clampdown in the US may also have spooked investors. New York Attorney General Letitia James took another swing at the digital-asset industry with a lawsuit against KuCoin, one of the largest crypto exchanges. 

“The market seems to be expressing that whatever issues the NYAG has with KUCOIN might be applicable to Huobi as well,” said Stephane Ouellette, chief executive of FRNT Financial Inc.