Founder of Crypto Exchange Huobi Sells Ownership to a Hong Kong Firm

The founder and majority shareholder of Huobi Global, which is one of the largest cryptocurrency exchanges in the world, has decided to sell all of his shares to a Hong Kong-based asset management firm in light of a collapse in the crypto market and China's crackdown on the industry, according to a report by SCMP.

This was made public on Saturday, October 8, in a statement on the Huobi website that omitted the seller's identity. The same day, Leon Li Lin, the company's founder, stated in a private WeChat post that he would transfer ownership to About Capital Management.

What's Next for Huobi?

According to a statement from the company, Huobi intends to pursue several additional worldwide brand promotion and business expansion activities following the purchase, which will involve the infusion of funds.

The deal won't impact Huobi's core operations and business management teams, the company added.

Huobi was established in 2013 by Li, a seasoned Oracle employee, who made it into a big global bitcoin exchange. It has, however, had to deal with the industry's continued crackdown by the Chinese government.

It began transferring its servers and personnel outside the mainland after China outlawed bitcoin exchanges in 2017, yet some Chinese consumers were still able to get around the restrictions and utilize Huobi's services.

Huobi has since ceased allowing users to establish new accounts with mobile phone numbers from the Chinese mainland and has halted future trading to better comply with Chinese rules.

The crypto exchange was also one of the first companies with Chinese roots to stop offering bitcoin mining services and selling mining equipment after China outlawed the practice last year.

Effects of the Crackdown and Crypto's Sell-off

According to Colin Wu, a well-known cryptocurrency and blockchain blogger, Li, who owned more than half of Huobi's shares, was reportedly considering selling his interest in August. Wu claimed that Huobi's revenue fell after it cleared out all Chinese users.

SCMP noted that the cryptocurrency sell-off had impacted Huobi's operations as well. The price of bitcoin, the biggest cryptocurrency in the world by trading volume, circled at US$20,000 on Friday after reaching a high of almost US$67,000 in November of last year.

The company's Hong Kong-listed subsidiary, Huobi Technology, disclosed a loss of HK$48.8 million (US$6.2 million) for the six months that ended in March, compared to a profit of HK$54.1 million the previous year. Their amount of revenue increased by 34% to HK$351.8 million, as per SCMP.

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Written by Joaquin Victor Tacla