Crypto exchange Huobi in big trouble

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Crypto scam sector is gradually getting exposed, where the latest in the list of troubled crypto cartel is Huobi, where according to media reports, the young Blockchain-powered financial services industry is going through is far from over. It said, cryptocurrency exchange Huobi has just announced a 20 percent reduction in its workforce to reduce costs with “cope with the fall in crypto prices”.

Huobi spokesperson told Reuters, “with the current state of the bear market, a very lean team will be maintained going forward”. Huobi employed around 1,600 people at the end of October 2022, while it is unknown how many of these employees will be sacked. However, this announcement of reducing workforce clearly indicate, this crypto venture also is going to financial crisis and may ultimately result in embracing a similar fate of Sam Bankman-Fried’s collapsed FTX.

Huobi is based in the Seychelles and been claiming to be one of the largest cryptocurrency exchanges. Every day the trading volume of this platform ranges between US$300-500 million.

The announcement of the workforce reductions has impacted HT, the native token or the cryptocurrency issued by the Huobi ecosystem. HT is down 7 percent in the last one week.

Huobi was founded in China in 2013 but had to go into exile after Beijing launched a crackdown against the crypto industry. As a result, Huobi now only has its consulting and research activities in mainland China while trading activities are outside the country. It has offices in Hong Kong, South Korea, Japan and the US. The company is owned by About Capital Management, a Hong Kong-based asset management firm.

Following collapse of FTX and unimaginable scandals surrounding it, while a large number of cohorts of Sam Bankman-Fried gone into hiding, there is serious doubts and mistrust surrounding Huobi. It may be mentioned here that, FTX, which was considered one of the strongest firms in the crypto sector after a valuation of US$32 billion in February 2022, just within the span of nine months, it had collapsed on November 11, 2022 when FTX was unable to meet the withdrawal requests of its investors and clients.

Fall of FTX has already resulted in a scent of suspicion while Binance, world’s largest cryptocurrency exchange is also facing trouble and it is also anticipated that Binance may suddenly collapse.

These suspicions had been reinforced by the decision of the audit firm Mazars to cut ties with all crypto firms. Mazars said in December 2022 that it “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”.

Billionaire Mark Cuban has 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. A wash trade, an illegal practice, consists of creating artificial interest around a financial product — a crypto token or coin in this case — to make a profit. This form of “pump-and-dump” scheme is widespread in the cryptocurrency industry.

According to a 2022 study by Forbes magazine on 157 centralized cryptocurrency exchanges, more than half the volumes of exchanges concerning bitcoin are fake.

In fact, the entire crypto sector is simply Ponzi schemes and fraud rackets.

Meanwhile, people are increasingly growing suspicious on crypto while hundreds of thousands of people who already have put their life-time savings in such fraud projects are worried about thinking if they would at least get their original investment refunded. Here are some of the comments by various individuals:

Thomas: Caroline Ellison, the ex-CEO of Alameda Research, disgraced and plead guilty to fraud, she said it best: crypto is all scams and memes.

Walter: China has already banned crypto. All other countries need to immediately do the same.

Julie: Governments need to ban crypto and take legal action against those involved in these massive scam ventures.

David: I heard, Dubai has become the new capital of crypto scammers and fraudsters, and it will very much likely that hundreds of Arab sheikhs will lose hundreds of millions of dollars in these fraudulent ventures.

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