Crypto Exchange Huobi Has Bad News

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This is bad news that the cryptocurrency industry could have done without.

This information suggests that the very difficult period that the young Blockchain-powered financial services industry is going through is far from over.

Cryptocurrency exchange Huobi has just announced a 20% reduction in its workforce in a general cost-cutting move to deal with falling cryptocurrency prices.

“With the current state of the bear market, a very small team will be maintained going forward,” Huobi’s spokesman told Reuters news agency.

The company employed some 1,600 people at the end of October. However, it is difficult to say exactly how many jobs will be cut as we do not have recent figures.

Huobi token impacted

Seychelles-based Huobi is one of the largest cryptocurrency exchanges. According to data firm CoinGecko, the platform records around $318 million in trading volumes in the past 24 hours.

The announcement of the workforce reductions impacted HT, the native token or even the cryptocurrency issued by the Huobi ecosystem. HT is down 7% in the last seven days.

The company had been founded in China in 2013 but had to go into exile after Beijing launched a crackdown on the crypto industry. As a result, Huobi now conducts consulting and research activities only in mainland China, while business activities take place outside the country. It has offices in Hong Kong, South Korea, Japan and the United States

The company is owned by About Capital Management, a Hong Kong-based asset management company.

Huobi is, like all cryptocurrency exchanges, subject to doubts and mistrust about its solidity after the unexpected bankruptcy of FTX. Considered one of the strongest companies in the crypto space after a valuation of $32 billion in February, FTX, founded by Sam Bankman-Fried, went bankrupt on November 11, unable to meet massive withdrawal requests. of its customers.

Since then, a scent of suspicion has surrounded the rest of the exchanges. Binance, the world’s largest cryptocurrency exchange, was the subject of much rumor in December, leading to panicked customers withdrawing $6 billion from Dec. 12-14, a spokesperson told TheStreet at l ‘era.

Worries

These suspicions had been reinforced by the decision of the Mazars audit firm to cut ties with all cryptography firms.

Mazars said in December that it “has suspended its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency industry due to concerns about how these reports are understood by the public”.

The purpose of the proof of reserves audit is to show that the crypto business has enough reserves to withstand a run on it from its clients and investors. This audit also aims to increase public trust and provide transparency when most crypto companies are unregulated, which means they are opaque and investors and customers can only rely on what senior leaders are saying.

Billionaire Mark Cuban further warned in an interview with TheStreet of a possible implosion of the illegal practice of washing trades which is expected to significantly affect centralized exchanges.

“I think the next possible implosion is the discovery and removal of fictitious trades on central exchanges,” the Dallas Mavericks owner told TheStreet in an email interview. “There are supposedly tens of millions of dollars in transactions and cash for tokens that have very little use. I don’t see how they can be so liquid.”

A wash trade, an illegal practice, consists of creating an artificial interest around a financial product – a crypto token or a coin in this case – to make a profit. This form of pump-and-dump scheme is prevalent in the cryptocurrency industry.

While plenty of washouts have taken place in traditional finance, the crypto space is particularly ripe for the practice as nearly 13,000 cryptocurrencies are listed, according to data firm CoinGecko. Scammers need to make one or another token stand out from this pack so that they can engage in the washing trade.

For example, according to a 2022 study by Forbes magazine of 157 centralized cryptocurrency exchanges, more than half of bitcoin trading volumes are fake.

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