One of the latest victims of the crisis affecting the sector for a year is the platform, which is headquartered in Seychelles.
The cryptocurrency industry has received more bad news with the announcement from Huobi, a cryptocurrency exchange, that it will be laying off 20% of its workforce as a cost-cutting measure in response to the decline in cryptocurrency prices. A spokesperson for Huobi told Reuters that, “With the current state of the bear market, a very lean team will be maintained going forward.”
It is unknown exactly how many jobs will be lost as the company employed around 1,600 people as of October, but it is clear that the struggles of the young blockchain-powered financial services industry are far from over. This news suggests that the difficult period being experienced by the industry is likely to continue for a while longer.
Huobi Token Impacted
Huobi, one of the largest cryptocurrency exchanges based in Seychelles, has recently announced a 20% reduction in its workforce as a cost-cutting measure due to the decline in cryptocurrency prices. Data firm CoinGecko reports that the platform has recorded around $318 million in trading volumes in the past 24 hours.
The news of the workforce reductions has had an impact on the value of HT, the native token or cryptocurrency issued by the Huobi ecosystem, which has decreased by 7% in the past week.
Huobi was founded in China in 2013 but was forced to move its operations overseas after the Chinese government implemented a crackdown on the cryptocurrency industry. As a result, Huobi now only conducts consulting and research activities in mainland China, while its trading activities take place outside of the country. Huobi has offices in Hong Kong, South Korea, Japan, and the United States.
Huobi is owned by About Capital Management, a Hong Kong-based asset management company. Like all cryptocurrency exchanges, Huobi has faced doubts and mistrust regarding its stability, particularly in the wake of the unexpected bankruptcy of FTX. FTX, which was valued at $32 billion in February and considered one of the strongest firms in the cryptocurrency space, filed for bankruptcy on November 11 due to its inability to meet the large withdrawal requests of its customers.
This event has led to increased suspicion surrounding other exchanges, including Binance, the largest cryptocurrency exchange in the world. In December, rumors about Binance’s financial stability prompted panicked customers to withdraw $6 billion from the platform from December 12 to December 14, according to a spokesperson.
These suspicions were further fueled by the decision of audit firm Mazars to sever ties with all cryptocurrency firms. In December, Mazars announced that it had “paused its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public.” The purpose of the proof of reserves audit is to show that a cryptocurrency firm has enough reserves to handle a potential run on the company by its clients and investors, and to increase public trust and demonstrate transparency in an industry that is largely unregulated and therefore opaque.
In an interview with TheStreet, billionaire Mark Cuban warned of the potential for the illegal practice of wash trading, which he believes could lead to the implosion of centralized exchanges. Wash trading, a form of “pump-and-dump” scheme, involves creating artificial interest in a financial product in order to profit from it. This is especially prevalent in the cryptocurrency industry, where there are over 13,000 listed cryptocurrencies, according to data firm CoinGecko. A 2022 study by Forbes magazine found that more than half the volumes of exchanges involving bitcoin were fake.