HTX Exchange Faces $258 Million Outflow Amidst Security Woes

In the aftermath of a major hack, HTX Exchange, a digital asset trading platform associated with Chinese industry mogul Justin Sun, has experienced a substantial $258 million net outflow since resuming operations. DefiLlama data reveals that these funds departed the exchange between its November 25 restart and December 10, indicating unease among clients following the security incident.

HTX, formerly known as Huobi, reported a loss of $30 million in crypto tokens during the breach, prompting a temporary suspension of withdrawals and deposits. Despite the setback, the exchange, which boasts an average trading volume of $1.6 billion in the past 24 hours, maintains its position within the top 20 crypto exchanges by trading volume, according to CoinMarketCap figures as of December 10.

Justin Sun, linked to the Poloniex exchange and the HECO Bridge, also faced security challenges with these platforms in November. Poloniex and HECO fell victim to hacking incidents, resulting in the theft of approximately $200 million in cryptocurrency.

Following the November incident, Sun assured users in a post on X that a comprehensive investigation was underway, and the exchange would “fully compensate for HTX’s hot wallet losses.” Notably, this wasn’t the first time HTX suffered a breach; hackers had previously stolen $8 million from the platform in September.

Digital-asset investors are increasingly vigilant about shifts in flows and reserves at virtual currency exchanges, particularly after the collapse of the FTX platform last year. HTX, currently under scrutiny, holds approximately 33% of its reserves in Bitcoin and 32% in the TRX token from the Tron blockchain, a project launched by Sun in 2017. The exchange’s native coin, HT, accounts for around 14%, followed by a Sun-backed token named stUSDT at 12%.

TRX, at the center of US fraud allegations against Sun, faced legal challenges from the Securities and Exchange Commission (SEC) in March. The lawsuit accused Sun and his firms of market manipulation to create the appearance of active TRX trading. Sun responded to the allegations on Twitter, stating that the lawsuit “lacks merit.”

Security firm BlockSec reported that HTX managed to recover the $8 million stolen in September. However, hackers still appear to maintain control over the $30 million taken in the recent security breach, adding another layer of uncertainty to the exchange’s future. As the crypto community closely monitors the situation, HTX grapples with the task of restoring confidence among its user base amidst the ongoing challenges.