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Justin Sun-owned crypto exchange HTX (formerly Huobi Global) has reportedly moved $1.3 billion worth of reserve funds to an undisclosed “third party.”
In HTX’s latest Proof of Reserves report, 1,719 Bitcoin (BTC)—about 8% of its reported 20,922 BTC reserves—were held with the third party. For Ethereum (ETH), 76,515 ETH from its reported reserve holdings were also transferred to the same custodian.
The report also indicates that 99% of HTX’s $238 million USDC reserves were moved to the undisclosed custodian. In addition, $819 million of its $906 million USDT reserves was sent to the third party.
Collectively, these transfers and other assets bring the third party holdings to $1.3 billion.
HTX was recently sanctioned by the U.K. government for allegedly helping Russian entities move capital.
Security researcher Taylor Monahan said the sanctions changed the risk profile for HTX, adding that government overreach has become a bigger threat than hacking.
“Risk has changed for HTX due to the sanctions, which means that govt overreach is now a bigger threat than, say, getting hacked.”
Monahan’s view was that the move was likely intended to safeguard legitimate users from having their funds frozen. Web3 investigator ZachXBT also characterized the U.K. crypto sanctions as “a bit of an overreach,” arguing that the U.K. government pursued a blanket ban affecting innocent Asian retail users on HTX rather than focusing on a specific $1.2 billion laundering case.
Binance, Bybit, OKX, and now Hyperliquid have reportedly begun banning addresses with transfers linked to the HTX exchange. Community members said the actions appeared to target the broader HTX user base, regardless of whether individual users were involved.
Some critics argued against the bans, including Hyperliquid. Supporters of the restrictions said that if Hyperliquid does not act, it could face sanctions as well. The concern raised is that even users with no wrongdoing could see funds automatically frozen until compliance issues are resolved.
HTX stated that it still has 1:1 reserves for user assets. It also reportedly ranked second in capital netflows in the past week despite the U.K. sanctions.
Coinbase has launched a High Yield USDC vault within its in-app DeFi lending offering, adding a second lending option that provides exposure to a wider range of collateral assets. The product is powered by Morpho infrastructure and uses vault allocations curated by Steakhouse Financial.
