Cryptocurrency exchanges Huobi, Binance, and MEXC have burned $678 million worth of native exchange tokens. Meanwhile, Huobi advisor Justin Sun is facing heavy criticism from US regulators.
Huobi burned 296,989,226 HT, or $3.3 million, which is about 20% of its first quarter revenue in 2023, while competitor MEXC burned about $2 million or $4 million of its MX token.
Huobi Burn reveals declining revenue
MEXC uses 40% of its profits to buy back and burn MX every quarter to keep the circulating supply of the token at 100 million.
Cryptocurrency exchanges minify their native coins by sending them to an inaccessible wallet. Funds sent to these addresses can be subtracted from token trading.
After Huobi’s recent burn, the circulating supply of its HT token has reached 203.1 million HT. The price of the asset is currently trading at $3.94, down 90% from its all-time high and up 1% in the last 24 hours.
exchange experienced A 25% decline in the value of the dollar during the period from the fourth quarter of 2022 to the first quarter of 2023, which reflects a commensurate decrease in revenues.
According to Huobi Global Advisory Board Member Justin Sun, Huobi’s revenue accounted for about 11% of the group’s revenue in the first quarter.
The US Securities and Exchange Commission has mandated Sun to offer unregistered securities TRX and BitTorrent (BTT). The agency also accuses Sun of manipulating the secondary market for TRX and paying celebrities to promote the coin without disclosing their compensation. The US court will issue summary judgment if Sun does not respond to SEC attorney Adam B. Gottlieb within 14 days.
Recently, Binance burned $674 million of its BNB token as part of its quarterly Auto-Burn program. The exchange, which is the largest copier of the Luna Classic cryptocurrency, has also burned 28.95 billion tokens as of March 2023.
In May last year, Luna Classic collapsed along with the TerraUSD stablecoin, now called Terra Classic. LUNC number burnt Worth about $53 billion, he’s worth about $6.7 million at the time of writing. Mexico It is the second largest contributor to Burning LUNC.
Blockchain firm warns of potential Huobi liquidity crisis
The recent crash of FTX has increased scrutiny of the tokens for exchanges.
A leaked balance sheet belonging to Alameda Research revealed large concentrations of FTX’s illiquid FTT tokens. The token offered holder discounts on trading, among other things, with FTX regularly burning a portion of their FTT. Alameda Research was a market maker for FTX, the Bahamian stock exchange co-founded by Sam Bankman-Fried in 2019.
The subsequent crash in the price of FTT bankrupted both Alameda Research and FTX. Now, the disclosure of Huobi’s asset composition has raised some investors’ concerns.
Blockchain intelligence firm CryptoQuant recently revealed that Huobi’s HT token makes up nearly a quarter of the exchange’s asset reserves. The company warned that this level of HT concentration could cause liquidity risks if investors withdraw funds en masse from the platform.
Earlier this year, Sun deposited $100 million in stablecoins to support the exchange’s liquidity.
Last year, Sun denied that the exchange was in financial trouble, despite a round of layoffs in October.
On-chain data revealed by Sun recently he moved About $4.6 Million in ETH to Huobi and Binance Amid SEC Allegations.
BeInCrypto has reached out to Sun but has not heard back at press time.
For a recent Be (In) Crypto Bitcoin (BTC) analysis, click here.
Adhering to the Trust Project’s guidelines, BeInCrypto is committed to providing unbiased and transparent reporting. This news article aims to provide accurate and timely information. However, readers are advised to independently check the facts and consult with a professional before making any decisions based on this content.