Cryptocurrency exchange Huobi has bad news
This is bad news that the cryptocurrency industry could have done without.
This information suggests that the very difficult period that the young Blockchain-based financial services industry is going through is far from over.
Cryptocurrency exchange Huobi 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 lean team will go forward,” Huobi’s spokesman told Reuters news agency.
The company employed about 1,600 people at the end of October. However, it is difficult to say exactly how many jobs will be eliminated because we do not have recent data.
Huobi token hit
Huobi, which is based in the Seychelles, 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 workforce reductions impacted HT, the native token or cryptocurrency issued by the Huobi ecosystem. HT is down 7% over the past seven days.
The firm was founded in China in 2013 but had to go into exile after Beijing launched a crackdown on the cryptocurrency industry. As a result, Huobi now only has its research and consulting operations in mainland China, while its business operations are 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 wealth management firm.
Huobi is, like all cryptocurrency exchanges, subject to doubts and distrusts about its solidity after the unexpected failure of FTX. Considered one of the strongest firms in the crypto space after a $32 billion valuation in February, FTX, founded by Sam Bankman-Fried, went bankrupt on Nov. 11 unable to meet its clients’ massive withdrawal requests.
Since then a scent of suspicion surrounded the rest of the exchanges. Binance, the world’s largest cryptocurrency exchange, was the subject of many rumors in December, resulting in panicked customers withdrawing $6 billion from Dec. 12-14, a spokesperson told TheStreet at the time. .
Concerns
These suspicions had been reinforced by the decision by accounting firm Mazars to cut ties with all cryptocurrency firms.
Mazars said in December that it had “suspended its activity related to the provision of reserve testing reports for entities in the cryptocurrency industry due to concerns about how these reports are being understood by the public.”
The goal of the proof of reserves audit is to demonstrate that the cryptocurrency company has sufficient reserves to withstand a rush from its customers and investors. This audit is also intended to boost public trust and demonstrate transparency when most crypto firms are unregulated, meaning they are opaque and investors and customers can only rely on what top executives say.
Billionaire Mark Cuban also warned in an interview with TheStreet of a possible implosion of the illegal practice of transaction washing which is expected to significantly impact centralized exchanges.
“I think the next possible implosion is the discovery and removal of wash trades on the central exchanges,” the Dallas Mavericks owner told TheStreet in an email interview. “There are allegedly tens of millions of dollars in trading and liquidity for tokens that have very limited use. I don’t see how they can be that liquid.”
A wash trade, an illegal practice, involves creating an artificial interest around a financial product (in this case, a cryptographic token or coin) in order to make a profit. This form of “pump-and-dump” scheme is very popular in the cryptocurrency industry.
While there has been a lot of money trading in traditional finance, the crypto space is particularly conducive to the practice because nearly 13,000 cryptocurrencies are listed, according to data firm CoinGecko. Fraudsters have to make one or the other token stand out from that pack so they can engage in the laundering trade.
For example, according to a 2022 Forbes magazine study of 157 centralized cryptocurrency exchanges, more than half of bitcoin trading volumes are fake.
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