The crypto winter has infected the Huobi exchange, spreading its pains and taking root. The founder of the Huobi Group, Leon Li, is negotiating with a group of investors to sell his majority stake in exchange for $3 billion or more. This current sell-off may be the world’s largest takeover since a $2 trillion global crypto collapse began.
According to individuals familiar with the situation, Leon has held talks with several investors to sell a roughly 60% stake in his business, which he created nearly a decade ago. Justin Sun, the creator of TRON, and crypto-billionaire Sam Bankman-Fried have had preliminary discussions with Huobi about a share transfer.
Existing supporters such as ZhenFund and Sequoia China were informed about Li’s decision during a July shareholders’ meeting. The Huobi acquisition may be completed as soon as the end of this month. Li is seeking a valuation of $2 billion to $3 billion for the business, implying a sale may be worth more than $1 billion.
The firm has attempted to expand its international presence in recent months by receiving regulatory approval in numerous nations. The Australian financial watchdogs recently gave the thumbs up as well. Following the sell-off rumors, Huobi Technology’s stock reversed losses and rose as much as 5.7% over the last 24 hours. Huobi’s HT token increased by 25%. Huobi handled around $1.12 billion of crypto transactions during the 24 hours to August 12. The exchange is valued at roughly $19 billion, with a P/E ratio of 18.6.
Some potential buyers are said to be some of the industry’s leading figures. However, Sun stated that he had not spoken with Li about the deal, while an FTX spokesperson denied giving a statement. Huobi, once the world’s most active Bitcoin trading platform, has been retreating from China, where it once had the largest user base and source of income. Last year’s announcement by Beijing that crypto-transactions were unlawful effectively ended Li’s exchange’s relationship with Chinese consumers.
The exchange began by trading in crypto for global crypto investors and has since expanded into international markets, including Turkey and Brazil but is competing with bigger rivals like Binance and FTX. It’s uncertain whether a buyout could include Hong Kong-listed Huobi Technology Holdings Ltd. This affiliate manages digital assets for professional investors and is licensed by Hong Kong’s securities regulator. Huobi, like many other exchanges, had to fire several employees due to the crypto winter and investor exodus. In June, Huobi dismissed at least 30% of its staff.
Leon Li, a former Oracle Corp. coder, co-founded Huobi in 2013 and quickly made the Beijing firm the most active Bitcoin exchange by offering zero transaction fees. In 2017, Chinese authorities ordered local exchanges to cease trading transactions involving fiat and digital currencies. In 2020 Li said that he had never received any formal notification barring him from departing China, but he’s decided not to because of the risks involved.