Huobi Accuses Former Senior Manager of Making $5M via Illegal Trades

key takeaways

Chen Boliang reportedly set up a Huobi retail account in his father’s name and provided it with $20 million in credit
Huobi terminated Chen’s employment in May 2020, a spokesperson told Blockworks

A one-time senior manager at prominent cryptocurrency exchange Huobi has been accused of raking in $5 million in Tether (USDT) by secretly trading against a company account under his control.

Chen Boliang, the former employee, is being prosecuted in Hong Kong for the alleged trades made in February and March 2020, the Financial Times reported on Wednesday. Huobi was founded in China in 2014 but has since registered in the Seychelles following crypto crackdowns in the mainland.

Chen’s employment with Huobi Global was terminated in May 2020, a company spokesperson told Blockworks. He was part of Huobi’s institutional clients department.

“We have no further comments pertaining to the charges against Mr. Boliang Chen and believe in the administration of justice by the HK Special Administrative Region,” they added.

Shortly after his termination, Chen was arrested on charges of using Huobi’s computers with criminal and dishonest intent, as well as employing the illegal proceeds of $5 million in the stablecoin USDT, the FT said, citing Hong Kong court records. He faces seven counts in total.

A civil lawsuit reportedly filed by the crypto exchange shows Chen used his father’s name to create a Huobi retail account and provided it with a $20 million credit line directly from the firm.

The suit argues the former employee traded against a Huobi corporate account that was under his supervision, moves that helped him pocket $5 million.

Chen is set to face a magistrate at a preliminary hearing next week, according to the FT. This would determine whether the case holds sufficient evidence to go to trial. He’s currently free on a $25,000 bail, the report said, citing a charge sheet.

It isn’t clear how Huobi discovered Chen’s alleged illicit trades, but the exchange reported him to the police in April 2020. Huobi is currently the fourth largest crypto exchange in the world by trade volume, behind Coinbase, FTX and Binance, having processed more than $1.3 billion in trades over the past day, according to CoinGecko data.

Authorities have been closely eyeing the cryptocurrency sector after its meteoric growth over the past year. Earlier this month, the Department of Justice indicted former OpenSea head of product Nathaniel Chastain on wire fraud and money laundering charges in connection with NFT insider trading.

An attorney for Chen didn’t immediately return Blockworks’ request for comment.

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