Huobi's Korean Division to Cut Ties With Its Parent Company

The Korean division of Huobi is planning to end its corporate relationship with Huobi Global and become an independent business, according to a local report published Monday.

"Huobi Korea has begun preparations to purchase shares held by Huobi Global and change its name," the report said, adding that the company plans to consult with internal and external stakeholders on a new name.

The equity relationship between the new company and Huobi Global will also need to be worked out. Over 50% of Huobi Korea's existing shares are currently owned by Leon Li, the founder of Huobi Global. The next largest shareholders are Cho Kook-bong, the chairman of Huobi Korea, and Korea Real Estate Trust.

Cho is expected to purchase Li's shares, which would give him a 72% stake in the new company. According to the report, Cho also owns a large-scale cryptocurrency mining operation.

"Huobi Korea has suffered from being perceived as a foreign exchange, particularly with the image of a 'Chinese exchange,'" a souce said. "It can be interpreted as an effort to demonstrate that it is a 'domestic exchange' that is as safe as it is."

Like other crypto exchanges, Huobi has been under increasing financial stress as doubts about its reserves spur customer withdrawals amid the overall weakness of the digital currency market. On Jan. 6, Huobi confirmed plans to lay off 20% of its employees as part of an ongoing restructuring process.

Last October, Leon Li sold his entire stake in Huobi Global to About Capital, a Hong Kong-based investment firm that is reportedly led by Tron founder Justin Sun. The restructuring was announced soon afterward, and Sun was added to Huobi's advisory board.

The exchange also pushed back against rumors of its insolvency and reiterated statements made by Sun, who recently tweeted that the financial state of the exchange was good and user assets were fully protected.

The announced layoffs came a week after a news report revealing that the exchange was looking to trim costs and begin paying employee salaries with stablecoins instead of fiat currency, eliciting protests from staff.

These latest developments, combined with the struggles of other prominent exchanges within the crypto ecosystem, have led many to recommend that crypto holders remove their tokens from Huobi and other embattled platforms and self-custody them instead.

Data from DeFiLlama showed that the Total Value Locked (TVL) on Huobi has decreased from $3.56 billion on Dec. 15 to a low of $2.96 billion at the time of writing.