Huobi Founder is in Talks to Sell Majority Stake at $3 Billion Valuation
- Huobi, one of the largest crypto exchanges by volume, saw a decline in its revenue due to slow trading activities.
- The crypto exchange previously announced plans to lay off 30% of its workforce in a bid to lower its operating cost.
- Strict crypto regulations around the world have led to a drop in crypto prices and reduced investor presence in the market.
Huobi Group founder, Leon Li, is reportedly in talks with several investors to sell the majority of his controlling stake in the company for a valuation as high as $3 billion. Li reportedly wants to sell off almost 60% of the company, and sources state that an agreement could be reached before the end of this month. If this deal were to go through, it would be the biggest takeover in the industry since the crypto winter.
According to Bloomberg, some top names in the crypto circle, such as crypto billionaire Sam Bankman-Fried and Justin Sun, Tron’s founder, have discussed the possibility of buying the shares. However, there is no official confirmation from both parties.
Bloomberg said it received confirmation from a Huobi spokesperson that Li had discussed a potential sale with a number of institutions. According to them,
He (Li) hopes that the new shareholders will be more powerful and resourceful, and that they will value the Huobi brand and invest more capital and energy to drive the growth of Huobi.
Notably, Sun reportedly confirmed to Bloomberg that he had not discussed the share sale with Li in any meetings. However, more details on the sale are bound to emerge in the coming days. Founded in 2013, Huobi is one of the foremost crypto exchanges and one of Asia’s largest exchanges by volume.
Huobi reportedly had a market share of more than 25% among crypto-only exchanges at its peak in late 2020. But over time, its market share has decreased to about 5% now, with rival Binance controlling the bulk of the market.
Following the Chinese government’s crackdown on crypto firms, there were reports that Huobi could be forced to lay off 30% of its workforce. The crypto exchange has seen a drop in its revenue after Chinese officials banned crypto trading activities in the region.
The company allegedly incurred an operating cost greater than its revenue and was considering steps to strike a balance. Huobi further announced plans to close some of its offices overseas and reduce its costs by a huge margin.
Huobi is not the only crypto exchange struggling to stay afloat during this bear market. Some other exchanges have been forced to significantly cut down their workforce, while others are considering shutting down operations. There are many factors behind the recent decline in trading activity, which has affected the finances and income of these exchanges.
One of the most significant reasons would be the increase in crypto regulation by regulatory agencies around the world. Some countries have set up strict crypto policies, while others have completely outlawed crypto activities in their region.
For example, China’s crackdown on cryptocurrency exchanges and initial coin offerings (ICOs) in December led to the market’s decline. South Korea also introduced new guidelines for trading cryptocurrencies, some of which placed limitations on existing exchanges. These regulatory policies both led to a decline in crypto prices and reduced investor activity in the industry.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
