Claims about crypto exchange Huobi’s financial health and its executives’ legal entanglements have fueled market speculation over the weekend.

Huobi has been witnessing continued outflows from its total locked-up value (TVL), dropping to $2.4 billion from a level of $3 billion in July. As reported by FX168 Financial News, there have now been rumors that several Huobi exchange executives had been taken into custody by the Chinese police.

However, these claims were categorically denied by Justin Sun, a global advisor to the company, who took to social media to debunk the rumors. Despite these assurances, the market sentiment remained skeptical as the outflow continued.

USDT reserves across exchanges

A closer examination reveals that Huobi’s situation may not be isolated. According to data from Glassnode, USDT reserves, on all chains, across most top exchanges, including Huobi, have depleted at a similar rate. This suggests that the concerns around Huobi might be part of a broader market trend rather than an issue specific to Huobi.

Crypto trading on centralized exchanges declined by 12% to $2.36 trillion. This is the lowest volume recorded since the beginning of the year, indicating a significant downturn in trading activity, according to CCData.

A breakdown of these trading activities showed that spot trading volume fell 10.5% to $515 billion —the second-lowest since March 2019. On the other hand, derivatives volume fell 12.7% to $1.85 trillion, which is the second-lowest volume since December 2020.

The crypto research firm attributed the diminished volume to the lack of price action volatility in significant crypto assets, including Bitcoin (BTC) and Ethereum (ETH), which traditionally drive trading volumes. CryptoSlate Insight reported that BTC’s price movement in July was “closely confined” as the flagship digital asset had “virtually no change in its price” on some days.

During a relatively stable second quarter, Bitcoin and Ethereum have expanded their shares to over 70% of the total cryptocurrency market capitalization for the first time since April 2021