Li Lin: The “$30 million funding hole” is essentially a loss of position caused by extreme market conditions when the exchange was operating margin trading business.

Odaily News Regarding Sun Yuchen’s claim that “there was a $30 million hole when Li Lin sold Huobi”, Li Lin responded as follows:
1. Different understandings on the calculation method of assets during the delivery process During the HTX delivery process in October 2022, the two parties had major differences in the calculation method of user assets. The specific situation is as follows:
1. At the time of settlement, our financial team independently eliminated users with negative assets in accordance with industry practices and calculated the total assets of users accordingly.
2. If users with negative assets are not excluded, the calculated total assets of users will be lower than the actual total assets, resulting in insufficient tokens reserved at the time of delivery, affecting user redemption.
3. All accounts of the delivery process are fully archived and have been fully delivered to Justin Sun’s team for independent audit and verification.
Simply put, at the time of delivery, we had already taken into account the negative assets of users and reserved sufficient reserve funds. Mr. Sun Yuchen and I have communicated on this matter many times, and Mr. Sun Yuchen also clearly stated that he hopes to further check the accounts and clarify the facts. Therefore, this is not the so-called "concealment of transfer" or "fund hole", but because it has been two years since the delivery was completed, the core personnel and financial data have changed significantly, resulting in misunderstandings between the two parties on the calculation method of the financial data at the time of delivery.
2. Regarding the so-called “funding hole”
1. The "US$30 million funding hole" mentioned by Mr. Justin Sun is essentially a margin call caused by extreme market conditions when the exchange was operating margin trading (leverage) business.
2. The usual practice in the industry is that the exchange will seek compensation from the user as soon as possible. Only after a period of time when recovery is impossible will it be financially recognized as an operating loss, and the business income will cover the loss from the short position.
3. This type of situation is quite common in the industry and falls within the normal scope of financial processing, rather than "funding gap" or "concealed assets".
At the time of delivery, Huobi had already used the company's income to make this part of the financial processing. The assets delivered to the seller completely covered the user's assets, and there was no so-called "funding hole".
3. The delivery contract is subject to Hong Kong law and supports third-party legal arbitration
1. The asset delivery contract is signed and executed in Hong Kong and is governed by Hong Kong law.
2. If there is a dispute over the delivery results, we fully support fair adjudication by the Hong Kong courts or third-party arbitration institutions, and safeguarding the legitimate rights and interests of all parties through legal means, rather than unilaterally using social media for unilateral trials.
IV. Understanding but Opposing Irresponsible Speech
1. When the facts were not clear and there were serious differences between the two parties, Mr. Justin Sun relied on his strong media influence to unilaterally make remarks that were unfavorable to me on a public platform.
2. This behavior seriously affects my business reputation and may also mislead the market and investors and disrupt the normal operation of the industry.
3. I ask Mr. Justin Sun to immediately stop such behavior, return to the legal framework, and resolve business disputes through reasonable and legal channels.
According to previous news, Justin Sun posted on X: People who are familiar with the situation know that Li Lin concealed the due diligence materials at the time (when selling Huobi) and created a hole of 30 million US dollars inside. In the end, I discovered his tricks. After being exposed, he cheated and refused to give me the last cent, so I lent it to the company to fill it.