Financial News Agency | Blockchain Daily, August 31 (Reporter Xu Cihao) Recently, market rumors have revealed that the crypto exchange FTX has officially acquired Huobi with a valuation of US$5 billion and will subsequently change its name to HTX. Later, FTX founder Sam Bankman-Fried (SBF) clarified on social media that he did not intend to acquire Huobi.
Bloomberg previously reported that Li Lin, the founder of Huobi Group, is negotiating with a group of investors, hoping to sell about 60% of his shares in Huobi at a valuation of US$3 billion. Potential transaction targets include FTX founder SBF.
In response to various market news, a reporter from Blockchain Daily learned from insiders that "Li Lin is indeed selling shares, but it is not known to whom."
Huobi officials responded to reporters saying that there is currently no latest update on this information to share. The company is operating normally and continues to provide safe and reliable services to customers.
As the leading cryptocurrency exchange in the industry, Huobi has reached a crossroads again after the "9·4" incident in 2017, nine years after its establishment.
Former top player
In September 2013, three years after he founded Renrenzhe, Li Lin, a native of Hunan, founded Huobi.com (Huobi for short).
This year, Bitcoin ushered in a bull market. At the beginning of the year, the price of Bitcoin was still $13. By the end of the year, the price had exceeded $800, an increase of more than 6,000%.
Huobi quickly became the leading Bitcoin trading platform by relying on its “free transaction fee” marketing strategy. By around 2014, it had occupied more than 50% of the global Bitcoin trading market, and Li Lin also became the "big brother" of the industry.
However, in 2017, the currency circle encountered an industry crisis in the country.
On September 4, 2017, the central bank and seven other ministries and commissions issued the "Announcement on Preventing Financing Risks of Token Issuance", halting ICOs and defining them as illegal financial activities.
"Tokens or 'virtual currencies' used in token issuance financing are not issued by monetary authorities, do not have monetary attributes such as legal and mandatory, do not have the same legal status as currency, and cannot and should not be used as currency for circulation in the market." the announcement stated.
As a result, all domestic cryptocurrency exchanges were ordered to close within a time limit and stop new user registrations.
Since then, Huobi has switched cryptocurrency trading to the "Huobi Global Station" and placed its exchange business entities overseas; domestically, it has retained compliance entities such as Huobi China, and its business mainly serves the blockchain + industry.
At this stage, Huobi Global began its overseas layout, setting up sites in South Korea, Japan, the United States, Russia and other countries and regions. The monthly report in November 2017 stated that its new user growth was 2055%.
The growth of Huobi Global is also due to the industry bull market that started in the second half of 2017. In this bull market, the price of Bitcoin has reached a maximum of around $20,000.
However, the biggest beneficiary of this bull market is not Huobi, but Binance. After seven ministries and commissions issued the "Announcement on Preventing Token Issuance Financing Risks," Binance, which had just been established, all moved overseas and expanded significantly around the world, becoming the world's largest Bitcoin exchange in one fell swoop.
At this point, the market situation in which Binance is the dominant player has been formed.
The huge profits from crypto exchanges are beyond imagination. A reporter from Blockchain Daily previously reported that Binance’s profit in the first quarter of 2021 was US$3 billion, which is 19.2 billion yuan when converted into RMB, making more than 200 million RMB every day. Huobi’s profits in April 2021 also exceeded US$500 million, with daily profits exceeding US$16.67 million, which translates to more than 100 million RMB.
How much money has Li Lin made in the cryptocurrency industry?
According to the global rich list released by Hurun Research Institute in March 2022, Li Lin appeared among them with assets of 11 billion yuan. Appearing with him were Changpeng Zhao, founder of Binance, Sam Bankman-Fried, founder of FTX exchange, and Xu Mingxing of Ouke Cloud Chain.
Huobi’s “defeat”
2021 will become a turning point for Huobi.
On September 24, 2021, ten departments including the central bank issued the "Notice on Further Preventing and Dealing with the Risks of Speculation in Virtual Currency Transactions", once again emphasizing that virtual currency-related business activities are illegal financial activities. The "Notice" also clarifies that the provision of services by overseas virtual currency exchanges to residents in my country through the Internet is also an illegal financial activity. Compared with the multi-ministerial announcement in September 2017, this announcement clarified the gray area in which exchanges operate and strictly prohibits the provision of services to residents in China.
After September 4, 2017, various exchanges claimed that they would not provide services to the mainland, but this is not the case. In July 2018, a Beijing News investigation found that five of the top ten exchanges opened registration to mainland Chinese users, including Huobi, OKEx, Binance, etc.
After the "924" notice last year, Huobi took the lead in stating its intention to remove mainland users and clarified the removal process. On the afternoon of September 26, its official website released the "Announcement on the Gradual and Orderly Clearance of Existing Users in Mainland China." Huobi Global will authenticate existing users in mainland China and plans to complete the orderly clearing out before 24:00 on December 31, 2021, while ensuring the security of user assets. The announcement also stated that Huobi Global had stopped the registration of new users in mainland China on September 24.
At the same time, Li Lin is also clearing out domestic company entities. According to the industrial and commercial information of Tianyancha, among the seven companies for which Li Lin serves as the legal representative, except for Hainan Zhixu Shoujing Business Service Co., Ltd., which is still in existence, six including Beijing Huobi Tianxia Network Technology Co., Ltd. have been cancelled.
After withdrawing from the mainland Chinese market, Huobi co-founder Du Jun stated on social media that Huobi will focus on compliance business to expand overseas markets.
At that time, Huobi also began to learn from other exchanges and moved some employees of the exchange business overseas in an attempt to open up overseas markets. However, from the data point of view, Huobi’s overseas market has not opened up.
According to Coingeck market data, the trading volume of Binance, FTX, Coinbase, OKX, KuCoin, etc. has exceeded Huobi. As of press time, Huobi’s trading volume in the past 24 hours was US$658 million, which was 3.8% of Binance’s US$17.3 billion trading volume.
A former key account manager of Huobi told a reporter from Blockchain Daily that Huobi actually wanted to form an overseas team as early as 2020, but staff could not go out due to the epidemic at that time; by the time it started taking action at the end of 2021, the best opportunity had been missed, and Huobi team members lacked "overseas genes." "It is said that Huobi wants to change its name, or incubate a new exchange to continue to operate in the mainland market." said the person above. Huobi denied this to reporters.
In addition, a person who has a good personal relationship with Li Lin told the Blockchain Daily reporter that Li Lin’s idea of selling Huobi shares is not a recent one. He analyzed that Binance founder Zhao Changpeng and others are overseas, while Li Lin is "physically in the country" and needs to bear greater risks.
In response to market news that Li Lin is selling shares in Huobi, a Huobi insider told reporters: "Li Lin is indeed selling shares, but we don't know who he is selling to."
"Three or four people, including Li Lin, know who it was sold to, and the information from others is inaccurate because even the vice president level doesn't know who it was sold to," the insider said.
