Shalini Nagarajan

North Korean hacker group Lazarus made attempts to move funds worth $63 million that were stolen from last year’s <a href="https://blockworks.co/news/defi-cross-chain-horizon-bridge-hacked-for-100m">Harmony bridge hack</a>, but the crypto exchanges used for the process claim its transfers have been blocked.



Blockchain sleuth ZachXBT <a href="https://twitter.com/zachxbt/status/1614771861266792449" target="_blank" rel="noreferrer noopener">shared</a> on Twitter that the group moved some 41,000 ETH over the weekend using Ethereum-based Railgun, a smart contract that keeps user identities private, to exchanges Binance, OKX and Huobi. The transactions were carried out between Jan. 13 and 14.



ZachXBT also shared over 350 addresses associated with the hacker group.&nbsp;



Binance CEO Changpeng Zhao <a href="https://twitter.com/cz_binance/status/1614887319177428992" target="_blank" rel="noreferrer noopener">tweeted</a> that the exchange has previously detected the hacker’s fund movement, and that it coordinated with Huobi in freezing the accounts. They also together managed to recover 124 bitcoin ($2.6 million), according to Zhao, implying that some of the stolen ether was swapped for bitcoin.



Huobi too was able to detect and prevent the hacker from attempting to launder funds, <a href="https://twitter.com/justinsuntron/status/1614901672102465538" target="_blank" rel="noreferrer noopener">according to</a> Justin Sun. About Capital, Sun’s investment firm, <a href="https://blockworks.co/news/huobi-founder-sells-100-stake-to-justin-sun-fund-report">acquired Huobi in October</a>.&nbsp;



Harmony’s Horizon bridge was one of the biggest hacks of last year. It allows users to move their cryptoassets via cross-chain transfers between Ethereum, Binance Smart Chain and Harmony blockchains. The bridge was exploited in June 2022 for $100 million, with <a href="https://blockworks.co/news/funds-from-100m-horizon-bridge-exploit-sent-to-tornado-cash-mixing-service">the proceeds initially moved</a> via now-OFAC-sanctioned <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a>.&nbsp;



Blockchain analytics firm Elliptic <a href="https://hub.elliptic.co/analysis/over-1-billion-stolen-from-bridges-so-far-in-2022-as-harmony-s-horizon-bridge-becomes-latest-victim-in-100-million-hack/" target="_blank" rel="noreferrer noopener">said</a> that different types of cryptoassets were stolen including ETH, BNB, USDT, USDC and Dai. After the theft, the hacker used different types of decentralized exchanges to swap the tokens for ETH, which is a “common technique utilized by DeFi hackers,” the firm added.&nbsp;



The<a href="https://blockworks.co/news/crypto-hacks-2022"> total amount of funds lost to hacks in 2022</a> amounted to $4.3 billion of cryptocurrency, representing a 37% jump from 2021. Smart contract vulnerabilities that lead to malicious exploits remain among the most pressing threats that need to be solved in 2023.



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North Korea’s Lazarus Hackers Try to Exfiltrate Harmony Funds

Casey Wagner

As stablecoin USDD continues to trade below its peg, Justin Sun’s Huobi Global is suffering the consequences.&nbsp;



The crypto exchange has lost 18% of its market share volume since 2020 and faces an “uphill challenge” to claw it back, according to <a href="https://marketing.kaiko.com/huobi-market-share-plummets-in-2022?ecid=AOKeC1bT368fiSsbn0gy6c0fbLHnD37-FKuzd0GB-S_g3dV_UjT75qNkijnRcupqoObDf8sZzeDl&amp;utm_campaign=Research%20newsletter&amp;utm_medium=email&amp;_hsmi=67605844&amp;_hsenc=p2ANqtz-8SeydFj-Lg3OgST_EZvzcCm-jNdvhg1exXW2Uu-nYUyPMLxbf0zMDteIzWQ6KJGy1FII45P16kz8zd-zVySaZrAgUxKg2G49ZdbzhCP7nO2IaKMv0&amp;utm_content=67605844&amp;utm_source=hs_email" target="_blank" rel="noreferrer noopener">research</a> from data provider Kaiko on Monday. By the end of 2022, Huobi represented 4% of the overall exchange market, down from 22% in 2020. 



Stablecoin USDD is issued by the TRON DAO Reserve, which stabilizes exchange rates for stablecoins issued on the TRON blockchain, founded by Sun.&nbsp;



Sun’s latest woes began when USDD failed to regain its peg after FTX’s collapse. It has remained below $1 since. By publication, USDD was trading around $0.98.



Huobi customers pulled over $100 million from the platform last week as solvency concerns mounted. Sun, who is Huobi’s majority <a href="https://blockworks.co/news/huobi-founder-sells-100-stake-to-justin-sun-fund-report" target="_blank" rel="noreferrer noopener">shareholder</a>, in turn moved $100 million of USDC and USDT from Binance to Huobi.&nbsp;



Though <a href="https://blockworks.co/news/huobi-stablecoin-plunges-70-as-justin-sun-readies-tron-replacement" target="_blank" rel="noreferrer noopener">USDD</a> could “still regain its peg,” according to Kaiko analysts, Sun’s exchange has gone down as “undoubtedly the biggest loser of the crypto bear market.”



USDD — which issuers <a href="https://usdd.io/?utm_campaign=Research%20newsletter&amp;utm_source=hs_email&amp;utm_medium=email&amp;utm_content=67605844&amp;_hsenc=p2ANqtz-9hhDIJvgHvH5UeIscgpCjkz1a8AhVMPUMj6Vq8KDcXh2s1VzRuwCZfX1zTOICkg4n77A7ZIX6BR0tXHpKHljevBlmYCO5Dx9eUmuxvGLy86G56DTs#/" target="_blank" rel="noreferrer noopener">claim</a> is backed with a collateral ratio of more than 200% in combination of TRON’s native TRX, bitcoin, USDC and USDT — has faced significant headwinds, Kaiko said.&nbsp;



“When looking at USDD-USDT order books, which is the highest volume trading pair, we can observe that market depth on the bid and ask side has been persistently imbalanced since early December,” analysts wrote. “The ratio of bids to asks (total volume of bids divided by volume of asks) was below 1 for most of the past month, which suggests heavy selling pressure is keeping the price down.”



Earlier this month, Huobi moved to lay off 20% of its staff in response to the continued selloff in cryptoassets.



Binance, which suffered its own crisis of confidence in December, when customers pulled $6 billion off the exchange, remains the top platform by market share. Of centralized exchanges, Binance holds 80% of market share relative to 11 other centralized platforms, including Coinbase and Kraken.&nbsp;



“Overall, the market has consolidated significantly with Binance dominating the majority of trade volume relative to both centralized and decentralized exchanges,” Kaiko analysts wrote.



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Justin Sun’s Woes Continue as USDD Depeg Sparks Huobi Concerns

Ben Strack

Crypto layoffs continued apace this week as the sector remains stuck in a brutal bear market.&nbsp;



Crypto exchange Huobi plans to lay off about 20% of its staff, Reuters <a href="https://www.reuters.com/technology/crypto-exchange-huobi-lay-off-20-staff-justin-sun-2023-01-06/">reported</a> Friday. Plans are in place to shift to a “lean team” due to a tricky trading environment.&nbsp;



Blockchain analytics platform Nansen said in a <a href="https://twitter.com/nansen_ai/status/1611272809665396737">tweet</a> Friday that about $61 million of the roughly $94 million of net outflows Huobi has seen in the past week occurred in the past 24 hours.



A Huobi spokesperson did not immediately return a request for additional comment.&nbsp;



Silvergate said Thursday it would cut 200 positions, about 40% of its staff, to further slash its expenditures. The plan came as the crypto bank said its <a href="https://blockworks.co/news/silvergate-stock-plummets-45-on-major-staff-cuts-massive-withdrawals">customers pulled more than $8 billion</a> from their accounts over the course of the fourth quarter, forcing the company to sell assets at a major loss to fulfill withdrawals.&nbsp;



Donald Putnam, a managing director with mergers and acquisitions specialist Grail Partners, <a href="https://blockworks.co/news/bottom-feeders-who-would-be-interested-in-silvergate-now">told Blockworks</a> that while the cuts are “a strong move,” there is no way Silvergate can cut its way to profitability. &nbsp;



Another crypto company that has resorted to layoffs amid the tough market conditions is crypto lender Genesis.&nbsp;



The firm laid off 30% of its staff and is considering filing for bankruptcy. CoinDesk first <a href="https://www.coindesk.com/business/2023/01/05/crypto-lender-genesis-lays-off-30-more-of-its-staff/">reported</a> the steep cuts.&nbsp;



A Genesis spokesperson told Blockworks that the decision to reduce its headcount came amid “unprecedented industry challenges.”



“These measures are part of our ongoing efforts to move our business forward,” the spokesperson said. “We sincerely appreciate the hard work of our talented and dedicated team as we continue to work to identify the best outcome for Genesis’s business, clients and employees for the long-term.”



Osprey Funds has likewise instituted layoffs due to the market downturn, per two sources familiar with the matter.&nbsp;



Osprey CEO Greg King confirmed the cuts to Blockworks.&nbsp;



The executive declined to comment on the extent of the layoffs or when they transpired. One of the sources categorized the move as recent. Both sources were granted anonymity to discuss sensitive business dealings.&nbsp;&nbsp;&nbsp;&nbsp;



Osprey has several investment products that invest directly in a broad range of cryptoassets, including publicly traded trusts focused on bitcoin, polkadot and <a href="https://blockworks.co/news/osprey-funds-launches-solana-trust-amid-tokens-rally">solana</a>.&nbsp;



Executive hires



The former head of State Street’s digital finance unit is <a href="https://blockworks.co/news/ex-state-street-digital-head-to-lead-regtech-blockchain-startup">set to join</a> blockchain firm Securrency as its chief executive on Jan. 9.&nbsp;



<a href="https://www.linkedin.com/in/nchakar/">Nadine Chakar</a> began leading State Street Digital in June 2021 after the division <a href="https://blockworks.co/news/state-street-launches-digital-finance-unit-for-crypto">launched</a> as a way for the custody bank to expand its capabilities in crypto, central bank digital currencies, blockchain and tokenization.



Securrency founder Dan Doney, the firm’s previous chief executive officer, is set to continue on under the title of chief technology officer.



Zodia Custody tapped <a href="https://www.linkedin.com/in/juliansawyer/?originalSubdomain=uk">Julian Sawyer</a> to head the crypto service provider’s business.&nbsp;



A subsidiary of Standard Chartered, the company is looking to scale in 2023, it said in a statement. Zodia Custody is a trading venue and brokerage focused on digital asset markets designed for institutions.



Sawyer, Zodia’s new chief executive, previously held the same role at BitStamp from October 2020 to May 2021, according to his LinkedIn.&nbsp;



He co-founded Starling Bank in 2015 and was the company’s chief operating officer for four years. After that, he spent about a year as a managing director for crypto platform Gemini.&nbsp;



BitDAO hired ​​<a href="https://www.linkedin.com/in/arjunkrishankalsy/">Arjun Krishan Kalsy</a> as its head of ecosystem at<a href="http://mantle.xyz/"> Mantle</a>, an Ethereum layer-2 blockchain designed for hyper-scalability.



The Mantle network is owned by BitDAO, a decentralized platform built on the Ethereum blockchain. Mantle’s testnet launch is slated for this year’s first quarter, according to its website.&nbsp;



Kalsy was previously head of business development and growth at Polygon for nearly three years. There, he built relationships and secured several large deals with enterprise clients including Reddit, Instagram and Disney.&nbsp;



The UK’s National Crime Agency is seeking to hire a cryptocurrency investigator as it looks to form a specialized cryptocurrency and virtual assets team, according to <a href="https://www.civilservicejobs.service.gov.uk/csr/index.cgi?SID=b3duZXI9NTA3MDAwMCZzZWFyY2hwYWdlPTEmdXNlcnNlYXJjaGNvbnRleHQ9MjA1MjA0NzEmc2VhcmNoc29ydD1jbG9zaW5nJmpvYmxpc3Rfdmlld192YWM9MTgyODY0NCZvd25lcnR5cGU9ZmFpciZwYWdlYWN0aW9uPXZpZXd2YWNieWpvYmxpc3QmcGFnZWNsYXNzPUpvYnMmcmVxc2lnPTE2NzI4MTUyMDUtZDI0MTRhNTI4ODJkZmE5ODZjZTg5MzJkMjY4NTNhOTFjM2VjMGEyZg==">a job posting</a>.&nbsp;



The crypto unit is set to initially have five officers, Financial News <a href="https://www.fnlondon.com/articles/crypto-crime-uk-nca-job-anti-money-laundering-national-crime-agency-digital-fraud-20230104">reported</a>.&nbsp;



“The role will support existing and new investigations where specialist cryptocurrency experience is required along with taking a proactive lead in identifying targets for further development,” the posting said.



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Latest in Crypto Hiring: Huobi Layoffs Cap Another Week of Cuts

<div id="highlights-block_635f9dc3a54ad" class="highlights">
 <ul>
 <li>Justin Sun, who now plays a key role at Huobi, plans to replace HUSD with his own USDD</li>
 <li>HUSD&#8217;s recent plunge likely marks the end for the crypto exchange&#8217;s native stablecoin</li>
 </ul>
 
</div>



The swansong for Huobi Global&#8217;s dollar-pegged stablecoin is now playing out. HUSD fell to a low of <a href="https://www.coingecko.com/en/coins/husd" target="_blank" rel="noreferrer noopener">28 cents</a> this morning, four days after the crypto exchange <a href="https://www.huobi.com/support/en-us/detail/104921194018990" target="_blank" rel="noreferrer noopener">announced</a> it would delist the token.



Huobi, one of the largest crypto exchanges in the space, was recently <a href="https://cms.blockworks.co/huobi-founder-sells-100-stake-to-justin-sun-fund-report/" target="_blank" rel="noreferrer noopener">snapped up</a> by a Hong Kong-based asset management firm About Capital, which is <a href="https://cms.blockworks.co/huobi-founder-sells-100-stake-to-justin-sun-fund-report/" target="_blank" rel="noreferrer noopener">reportedly</a> spearheaded by Justin Sun. 



While Sun has denied being in charge of About Capital (as he initially did when he <a href="https://www.coindesk.com/markets/2019/11/12/despite-denials-tron-founder-confirms-investment-in-poloniex-crypto-exchange/" target="_blank" rel="noreferrer noopener">acquired</a> Poloniex), the controversial crypto entrepreneur is an official Huobi advisor following the deal. Sun told <a href="https://www.coindesk.com/video/justin-sun-usdd-to-be-one-of-the-settlement-stablecoins-on-huobi/" target="_blank" rel="noreferrer noopener">CoinDesk</a> earlier this month that Huobi would “probably list all the cryptocurrency against USDD,” a Tron-based stablecoin.



Huobi recently said all users&#8217; <a href="https://www.blockworksresearch.com/assets/husd" target="_blank" rel="noreferrer noopener">HUSD</a> would be converted to Tether (USDT) at a 1-to-1 ratio.&nbsp;The stablecoin was launched in September 2019, with its market capitalization briefly peaking at $1 billion in May 2021.



However, HUSD since failed to capture significant market share, hovering as low as $80 million last month. HUSD no longer features on Huobi but the token continues to trade on decentralized exchanges, with MDEX <a href="https://www.coingecko.com/en/coins/husd#markets" target="_blank" rel="noreferrer noopener">contributing</a> nearly 90% of the daily trade volume.



All this while Huobi may be undergoing a complete overhaul of its teams. China-based journalist Colin Wu <a href="https://twitter.com/WuBlockchain/status/1586308521418555392" target="_blank" rel="noreferrer noopener">reported</a> on Saturday that Sun’s TRON team appears to have taken charge of key divisions at the crypto trading firm, and Huobi’s current strength of 1,600 may be downsized as Sun believes there are too many employees.



In a <a href="https://twitter.com/justinsuntron/status/1586954207059329024" target="_blank" rel="noreferrer noopener">tweet</a> on Monday, Sun said his team was “extremely cautious” about the company’s future staff arrangements.&nbsp;Huobi didn’t return Blockworks’ request for comment by press time.



Huobi indeed appears to be in flux, but stablecoins have faced several headwinds over the last few months, including increased regulatory focus and changes in market perception from recent high-profile incidents like the collapse of Terra.&nbsp;&nbsp;



NEAR protocol recently <a href="https://cms.blockworks.co/near-nixes-algorithmic-stablecoin-usn/" target="_blank" rel="noreferrer noopener">shelved</a> its own algorithmic stablecoin USN to avoid another Terra-like situation.



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Huobi Stablecoin Plunges 70% as Justin Sun Readies Tron Replacement

<div id="highlights-block_6343e236024d3" class="highlights">
 <ul>
 <li>Tron founder Justin Sun is reportedly the core investor of About Capital, which just bought Huobi</li>
 <li>Huobi founder Leon Li had been shopping his stake for more than a year</li>
 </ul>
 
</div>



Huobi Global’s majority shareholder Leon Li has agreed to sell his entire stake in the crypto exchange to Hong Kong-based investment firm About Capital, reportedly spearheaded by Tron founder Justin Sun.



About Capital’s buyout arm will control Li’s stake upon completion of the transaction, the company said in a <a href="https://www.huobi.com/support/en-us/detail/84919491689932" target="_blank" rel="noreferrer noopener">statement</a> on Saturday. Li will no longer be involved in Huobi’s operations. Terms of the deal were not disclosed.



Huobi is one of the world’s largest crypto trading platforms, with analytics unit <a href="https://messari.io/exchanges" target="_blank" rel="noreferrer noopener">Messari</a> ranking the exchange eighth by total volume having processed nearly $111 million in trades over the past 24 hours.



China-based journalist Colin Wu <a href="https://wublock.substack.com/p/exclusive-the-real-buyer-of-huobi" target="_blank" rel="noreferrer noopener">reported</a> on Monday that Tron founder Justin Sun is the core investor in About Capital, implying that he is the real buyer of the stake (which the report pegged at $1 billion).&nbsp;



The <a href="https://www.theverge.com/c/22947663/justin-sun-tron-cryptocurrency-poloniex" target="_blank" rel="noreferrer noopener">controversial</a> crypto <a href="https://cms.blockworks.co/justin-suns-plot-to-divide-ethereum-off-to-rocky-start/" target="_blank" rel="noreferrer noopener">entrepreneur</a> told Wu that he didn&#8217;t participate and later <a href="https://www.theblock.co/post/175867/justin-sun-denies-being-real-buyer-of-huobi-stake-sale-exclusive" target="_blank" rel="noreferrer noopener">reiterated</a> his denial to The Block. Still, he&#8217;s now officially one of <a href="https://www.huobi.com/support/en-us/detail/34919663373190" target="_blank" rel="noreferrer noopener">Huobi’s global advisors</a>, alongside Valkyrie Investment CEO Leah Wald and About Capital founder Ted Chen. Sun has even updated his Twitter bio to reflect his new Huobi title.



Aside from Hong Kong-based fund manager About Capital, Chen also founded China’s hedge fund giant Greenwoods Asset Management.&nbsp;



Sun is said to have been present at Huobi’s event site at the recent TOKEN2049 conference in Singapore. 



Huobi Global is headquartered in Seychelles, according to the company’s <a href="https://www.hb.co.kr/en-us/about/" target="_blank" rel="noreferrer noopener">Korean website</a>. But its regional affiliates appear to have bases in different locations, with Singapore serving as the firm&#8217;s Asian headquarters. 



Huobi says it&#8217;s seeking a new base in Europe, after <a href="https://www.prnewswire.com/news-releases/huobi-begins-migrating-spot-trading-services-to-regulated-entity-in-gibraltar-reflecting-global-commitment-to-compliant-growth-301418248.html" target="_blank" rel="noreferrer noopener">moving</a> its spot trading operations to a subsidiary registered in Gibraltar last November. A Huobi spokesperson wasn&#8217;t immediately available to comment on the matter.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I am very honored to be appointed as a member of the Global Advisory Board of <a href="https://twitter.com/HuobiGlobal?ref_src=twsrc%5Etfw">@HuobiGlobal</a> and work with industry, academic, and policy leaders to help guide and grow this innovative, vibrant, and resilient organization in its latest chapter of global expansion. Full sail ahead. <a href="https://t.co/txZspJaV4Q">https://t.co/txZspJaV4Q</a>&mdash; H.E. Justin Sun🌞🇬🇩 (@justinsuntron) <a href="https://twitter.com/justinsuntron/status/1579186183871287296?ref_src=twsrc%5Etfw">October 9, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In any case, Huobi says the deal has no impact on its core operations and business management team, but says it will now take on international brand promotion and business expansion projects. That includes the appointment of its new global strategic advisory board, on which Sun now sits.



This isn&#8217;t Sun&#8217;s first foray into crypto exchanges. As part of a different investment group, Sun previously <a href="https://www.coindesk.com/markets/2019/11/12/despite-denials-tron-founder-confirms-investment-in-poloniex-crypto-exchange/" target="_blank" rel="noreferrer noopener">acquired</a> crypto exchange Poloniex in 2019 from stablecoin issuer Circle. He initially denied the buyout.



<h3>Huobi founder shopped stake long before Justin Sun&#8217;s reported buyout</h3>



During his time as chief, Li would reportedly hand over daily management responsibilities to his deputies for short periods to deal with health-related issues.&nbsp;



The company <a href="https://www.huobi.com/support/en-us/detail/54886961978434" target="_blank" rel="noreferrer noopener">gradually exited</a> its key market of China beginning in September 2021 following Beijing’s crypto ban. Because of the subsequent drop in revenue, Huobi was forced to start slashing 30% of its workforce this year, Wu <a href="https://twitter.com/WuBlockchain/status/1541683658817699842" target="_blank" rel="noreferrer noopener">reported</a>.



It has since spurred expansion in other markets, including Brazil and Turkey, but competitors such as Binance, FTX and OKCoin place higher on the basis of <a href="https://www.coingecko.com/en/exchanges" target="_blank" rel="noreferrer noopener">“Trust Score” rankings</a> on CoinGecko.



Li, the founder and CEO of Huobi Global, had been in talks with investors to sell his majority stake in the exchange for a while now. Bloomberg reported in August that he was only looking to <a href="https://cms.blockworks.co/crypto-moguls-compete-for-huobi-majority-stake-report/" target="_blank" rel="noreferrer noopener">sell 60% of his stake</a>, aiming for a company valuation of between $2 billion to $3 billion.&nbsp;



FTX founder Sam Bankman-Fried and Sun were reportedly among potential investors who discussed the stake sale with Li. But Bankman-Fried denied the rumors, saying FTX was not planning to acquire the exchange.



Sun didn’t return Blockworks’ request for comment by press time.



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Huobi Founder Sells 100% Stake to Justin Sun Fund: Report

<div id="highlights-block_62f61778d47fe" class="highlights">
 <ul>
 <li>Huobi founder seeks a valuation of up to $3 billion</li>
 <li>It’s unclear whether affiliate firm Huobi Technology is part of the stake sale</li>
 </ul>
 
</div>



Leon Li, the founder and CEO of <a href="https://cms.blockworks.co/tag/huobi/" target="_blank" rel="noreferrer noopener">Huobi</a> Global, is in talks with investors to sell his majority stake in the cryptocurrency exchange, <a href="https://www.bloomberg.com/news/articles/2022-08-12/china-crypto-mogul-seeks-to-sell-huobi-stake-at-3-billion-value" target="_blank" rel="noreferrer noopener">Bloomberg reported</a> on Friday, citing unnamed sources.



Li, who co-founded Huobi in 2013, reportedly wants to sell about 60% of his stake. He’s aiming for a valuation between $2 billion to $3 billion, implying that a sale could generate over $1 billion, the report said.



FTX founder Sam Bankman-Fried and Tron founder Justin Sun are among potential investors that have held preliminary discussions with Huobi about the stake sale, it added.



As one of the world’s largest crypto trading platforms, Huobi often sees daily volumes <a href="https://coinmarketcap.com/exchanges/huobi-global/" target="_blank" rel="noreferrer noopener">above $1 billion</a>. The exchange slowly <a href="https://www.huobi.com/support/en-us/detail/54886961978434" target="_blank" rel="noreferrer noopener">pulled out of</a> servicing users in China — previously a hotbed of revenue and clientele — after the country declared crypto-related transactions illegal last year. 



It isn’t clear whether the stake involved includes the company’s Hong Kong-listed affiliate Huobi Technology, which manages digital assets for investors. Huobi Tech’s shares are down 45% so far this year, <a href="https://www.tradingview.com/chart/?symbol=HKEX%3A1611" target="_blank" rel="noreferrer noopener">TradingView</a> data shows.



Huobi, FTX and the Tron Network didn’t return Blockworks’ request for comment by press time.



Some well-positioned venture capitalists and investors considered the recent meltdown in cryptocurrency markets as a buying opportunity for new projects. Periods of turmoil in the market are also seen as the best time to develop new services in the crypto sector.



Bankman-Fried took it upon himself to go on a deal frenzy, announcing agreements to buy <a href="https://cms.blockworks.co/bankman-fried-belies-bear-bids-for-bitvo/" target="_blank" rel="noreferrer noopener">Canadian crypto trading firm Bitvo</a>, as well as <a href="https://www.financemagnates.com/cryptocurrency/ftx-us-to-acquire-embed-to-provide-white-label-brokerage-services/" target="_blank" rel="noreferrer noopener">Embed Financial</a> and <a href="https://cms.blockworks.co/ftx-reaches-deal-to-acquire-blockfi-for-up-to-240m/" target="_blank" rel="noreferrer noopener">BlockFi</a>. He also offered to bail out Voyager Digital, but the bankrupt crypto lender <a href="https://cms.blockworks.co/voyager-lawyers-clash-with-bankman-fried-over-low-ball-buyout-offer/" target="_blank" rel="noreferrer noopener">denied</a> what it termed his “low-ball” bid.



Sun — who prefers to be known as His Excellency after a 2021 diplomatic appointment from the Caribbean island nation of Grenada — said last month he was <a href="https://cms.blockworks.co/sun-says-he-may-spend-5b-to-save-crypto-even-as-usdd-fights-to-hold-peg/" target="_blank" rel="noreferrer noopener">prepared to join</a> Bankman-Fried in offering financial support to companies within the crypto ecosystem, saying that he and the Tron protocol he founded were “ready to serve.” Sun previously acquired a stake in crypto exchange Poloniex and file-sharing pioneer BitTorrent, now called Rainberry, for $140 million.



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Crypto Moguls Compete for Huobi Majority Stake: Report

Sebastian Sinclair

<div id="highlights-block_62be2e7ca520f" class="highlights">
 <ul>
 <li>Despite current market woes, OP Crypto is launching a fund of funds designed to back budding fund managers of early-stage crypto startups</li>
 <li>OP Crypto&#8217;s latest fund follows on the success of its venture capital fund which is backed by the likes of Galaxy Digital and Digital Currency Group</li>
 </ul>
 
</div>



Venture capital firm OP Crypto, founded by former Huobi executive <a href="https://www.linkedin.com/in/davidgancheng/" target="_blank" rel="noreferrer noopener">David Gan</a>, said Thursday it has launched a new vehicle aimed at emerging fund managers focused on early-stage digital asset investments.



Dubbed OP Fund of Funds I (OP FoF I), the investment vehicle will target managers with vertical expertise in blockchain infrastructure, decentralized finance, non-fungible tokens (NFTs), the metaverse and games, among other areas. Emerging managers are those with limited experience charged with managing assets below a particular monetary threshold.



Despite <a href="https://cms.blockworks.co/vc-funding-slows-again-in-june-but-experts-say-worthwhile-projects-will-get-money/" target="_blank" rel="noreferrer noopener">declining venture capital interest</a> and a contracting market, OP Crypto said its latest fund has scooped up $50 million in commitments from the likes of FTX subsidiary LedgerPrime and investment firm FJ Labs. The new fund is attempting to target a hard cap of $100 million, according to a statement. 



Though not typical in crypto, fund of funds are a type of investment strategy operating as pooled capital that invests in other funds with the aim of reducing risk by broadening the diversity of investment vehicles under its belt.



Founded last year, the British Virgin Island-domiciled venture capital firm seeks to invest in fintech and blockchain technology sectors both indirectly, through its latest fund, and directly with another, dubbed Venture Fund I. 



The latter fund, which picked up a sizeable investment of $50 million from participants in March, is backed by some of the industry&#8217;s largest players including Galaxy Digital and Digital Currency Group, as well as institutional investors Bill Ackman and Alan Howard.



Lucas He, OP Crypto’s chief operating officer and another Huobi alumni, will serve as OP FoF I&#8217;s general partner. A veteran in the crypto space since 2013, He previously held fund of funds roles at Huobi Capital and State Street, according to his <a href="https://www.linkedin.com/in/lucashe/details/experience/" target="_blank" rel="noreferrer noopener">LinkedIn</a>.



Meanwhile, OP Crypto founder <a href="https://www.linkedin.com/in/davidgancheng/" target="_blank" rel="noreferrer noopener">David Gan</a> will take on the role of president and adviser to the fund without commitment conflicts, as it is expected Gan will continue to devote his attention to Ventures Fund I, according to the statement.



Investors in OP FoF I will receive access to deal flow from the managers and have the opportunity to double down on specific projects via co-investment opportunities, OP Crypto said.



&#8220;We plan to be a franchise of different crypto native funds,&#8221; He told Blockworks in an email discussing OP Crypto&#8217;s investment strategy. &#8220;Starting off with direct venture fund I and then following with FOF I, we plan to launch many successive fund vehicles down the road serving different purposes and risk appetites to our investor base.&#8221;



When asked about OP Crypto&#8217;s risk management approach amid the backdrop of overleveraged hedge funds, investors and liquidity providers, He told Blockworks his firm took a &#8220;disciplined approach.&#8221; To achieve this, He said OP Crypto deploys slowly — having invested only around 20% of its total operating capital last year — while also seeking to double down at reasonable valuations during the market downturn.



For OP FoF I specifically, he added, the fund will attempt to back managers that also share this &#8220;disciplined&#8221; and &#8220;concentrated approach&#8221; to deployment.&nbsp;



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OP Crypto’s ‘$100M’ Fund of Funds To Back Early Stage VCs

<div id="highlights-block_62b30805bfa78" class="highlights">
 <ul>
 <li>Chen Boliang reportedly set up a Huobi retail account in his father’s name and provided it with $20 million in credit</li>
 <li>Huobi terminated Chen’s employment in May 2020, a spokesperson told Blockworks</li>
 </ul>
 
</div>



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 <a href="https://www.ft.com/content/2f59b75a-8c48-41f9-9c16-59c1622de339" target="_blank" rel="noreferrer noopener">Financial Times</a> 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.&nbsp;



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.&nbsp;



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 <a href="https://www.coingecko.com/en/exchanges" target="_blank" rel="noreferrer noopener">CoinGecko</a> data.



Authorities have been closely eyeing the cryptocurrency sector after its meteoric growth over the past year. Earlier this month, the Department of Justice <a href="https://cms.blockworks.co/former-opensea-exec-charged-with-nft-insider-trading/" target="_blank" rel="noreferrer noopener">indicted</a> 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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Huobi Accuses Former Senior Manager of Making $5M via Illegal Trades

<div id="highlights-block_62ab12c69116d" class="highlights">
 <ul>
 <li>Some customers haven’t withdrawn their assets from the platform</li>
 <li>After its closure, Huobi Thailand won’t have contractual bindings to Huobi Group</li>
 </ul>
 
</div>



Cryptocurrency exchange operator Huobi’s Thai subsidiary is winding down after the local regulator revoked its license.



In a <a href="https://www.huobi.co.th/notice/detail/#id=2764" target="_blank" rel="noreferrer noopener">statement</a> on Thursday, Huobi Thailand said it no longer has an official license. The platform will permanently close on July 1, 2022. It had been attempting to contact its customers for the past 10 months to inform them to withdraw assets, the unit said.



“However, there are still an amount of out of reach customers which we couldn’t contact,” the trading platform added, according to a statement translated from Thai to English.



The unit listed Telegram and email addresses for those that have so far been unable to pull out their assets. Its announcement comes after Thailand’s Securities and Exchange Commission on Wednesday <a href="https://www.sec.or.th/TH/Pages/News_Detail.aspx?SECID=9474&amp;NewsNo=9474&amp;NewsYear=9474&amp;Lang=9474" target="_blank" rel="noreferrer noopener">announced</a> the local unit’s delisting as a digital asset trading center. Without providing much detail, the watchdog said Huobi Thailand failed to revise its systems and personnel in line with rules.



According to a <a href="https://www.sec.or.th/TH/Pages/News_Detail.aspx?SECID=9103" target="_blank" rel="noreferrer noopener">statement</a> on the regulator’s website, Thailand&#8217;s SEC proposed revoking the exchange’s local license in September. After notifying the firm about inconsistencies and giving it time for modifications, an investigation found the firm’s management structure and operations were insufficient to ensure compliance with relevant rules.



At the time, the regulator recommended to the country&#8217;s finance ministry to suspend Huobi’s services, during which customer assets should have been returned within 3 months. Considering the firm’s statement on Thursday, it is apparent that not all customers have recovered their assets.



Post-closure, Huobi Thailand will have no connections or legal obligations to the Huobi Group. “Huobi Group and its affiliates are not and will not be responsible for any issues regarding Huobi Thailand,” it said.



Huobi&#8217;s Thai unit and Huobi Global did not immediately return Blockworks&#8217; request for comment.



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Huobi Thailand To Close After Watchdog Cancels Trading License

Sam Reynolds

<div id="highlights-block_6180025d0ee89" class="highlights">
 <ul>
 <li>Three of China’s major tech giants signed a self-regulatory pledge over the weekend to not associate their burgeoning NFT marketplaces with cryptocurrencies</li>
 <li>Tencent, JD and Alibaba pledge brand NFTs as “virtual collectibles”, avoiding the wrath of regulators, for now</li>
 </ul>
 
</div>



China state media <a href="http://finance.sina.com.cn/china/2021-10-31/doc-iktzscyy2838576.shtml">reported</a> that three of China’s major tech giants have signed a self-regulatory pledge to keep their growing NFT marketplaces away from cryptocurrencies, eschewing the usual language used by their western counterparts.&nbsp;



Cryptocurrency is on rocky ground in China, as regulators have<a href="https://cms.blockworks.co/no-china-didnt-ban-crypto-its-just-pushing-exchanges-offshore/#:~:text=%E2%80%9CThere%20is%20currently%20still%20no,illegal%2C%E2%80%9D%20Zheng%20told%20Blockworks.&amp;text=Transacting%20cryptocurrencies%20itself%20has%20no%20legal%20protection%2C%20Zheng%20explained."> reinforced their position</a> that bitcoin is without legal standing. However, when it comes to NFTs, the country’s regulators are giving marketplaces some room to operate, provided the assets’ speculative nature is curtailed. Earlier this month, Alibaba and Tencent virtual marketplaces <a href="https://m.jiemian.com/article/6734814.html">decided</a> to play down the connections between their NFT collections and cryptocurrencies by instead renaming them as “virtual collectibles” and playing down the NFT terminology.&nbsp;



The recently signed agreement by Tencent, JD and Alibaba, known as the “Digital Culture and Creative Industries Self-Regulation Convention” is made up of 11 points that align with Beijing’s broader goals for the digital economy. They include “preventing money laundering, promising dissociation with virtual currency, upholding consumers rights, and promoting national culture” among others.&nbsp;



China’s Blockchain Service Network, its national infrastructure to promote blockchain technology for both government and private sector use, is also in the process of launching an NFT marketplace, although it is also playing down the connections in terminology to cryptocurrency by <a href="https://twitter.com/bsnbase/status/1454463112401276932">instead promoting </a>its own term: “digital distributed certificate”.&nbsp;



At the same time, Huobi, which is not a signatory to the agreement, announced today that it is launching its own NFT market called Huobi NFT as part of its own broader metaverse strategy.&nbsp;



&#8220;Huobi has been working on projects in the GameFi and NFT markets, so the launch of the Huobi NFT marketplace has been in the works for some time. We look forward to introducing this project to our global community,” Jeff Mei, Director of Strategy at Huobi Group, <a href="https://www.prnewswire.com/news-releases/huobi-launches-trial-for-nft-marketplace-furthering-its-gamefi-and-metaverse-expansion-strategy-301412737.html">said in a release</a>.&nbsp; Huobi <a href="https://cms.blockworks.co/huobi-turns-off-derivatives-desk-in-china/">recently shut down</a> its China-based derivatives trading desk as part of a strategic withdrawal from the China market, given the uncertain legal environment around digital asset trading within the country.

China’s Tech Giants: Yes on NFTs, No on Cryptocurrencies

<div id="highlights-block_617fcb59845a3" class="highlights">
 <ul>
 <li>Huobi’s derivatives desk is now closed for China-based users, after the company first announced a timeline for the shutdown in early October</li>
 <li>When the People’s Bank of China (PBoC) reiterated its stance in September on the legality of crypto in China, Huobi was one of the first exchanges to announce a plan to retreat from the country</li>
 </ul>
 
</div>



The clock has run out on the derivatives desk of the Huobi exchange in China, as it shut down operations Friday night local time, sticking with a timeline it <a href="https://www.huobi.com/support/zh-cn/detail/44887379528332">originally announced</a> at the start of October.



Huobi first announced that it was <a href="https://cms.blockworks.co/huobi-bans-chinese-based-users-from-trading-on-app/" target="_blank" rel="noreferrer noopener">banning China-based users</a> from derivatives trading in June. The exchange is Seychelles-incorporated, but Hong Kong-listed, and it&#8217;s understood to be in the process of reorganizing its operations to be more focused on Singapore, the city state with a stronger, more <a href="https://cms.blockworks.co/hong-kong-and-singapore-take-different-approaches-to-regulating-digital-assets/" target="_blank" rel="noreferrer noopener">crypto-friendly legal framework</a>. 



In late September, the PBoC reiterated that cryptocurrency and digital assets had no legal standing in China. This is not the same as a ban, as Bizantine Capital’s March Zheng explained to Blockworks at the time.&nbsp;



“There is currently still no legal guidance that defines mainland Chinese citizens owning crypto assets as being illegal,” Zheng told <a href="https://cms.blockworks.co/no-china-didnt-ban-crypto-its-just-pushing-exchanges-offshore/" target="_blank" rel="noreferrer noopener">Blockworks in a prior interview</a>. “The text can be interpreted that because there is no legal framework in terms of ownership, there is potential investment risk because the law cannot protect consumers.”



While crypto trading isn’t illegal per se, that hasn’t stopped many exchanges from giving notice that they intended to leave China and move to alternative jurisdictions, such as Singapore. One of the challenges that has arisen is that payment processing for crypto is nearly impossible for exchanges in China. That doesn’t stop the active over the counter market, however, which remains alive and well, with the price of USDT-RMB currency pairs trading at a similar price to the official USD-RMB exchange rate.



Huobi’s token, HT, seems unfazed by the news, likely as it was previously announced and already priced in. It’s up 10% and currently trading at $10.10, according to <a href="https://www.coingecko.com/en/coins/huobi-token" target="_blank" rel="noreferrer noopener">CoinGecko</a>.

Huobi Turns Off Derivatives Desk in China

Jacquelyn Melinek

<div id="highlights-block_60da0a05080e1" class="highlights">
 <ul>
 <li>The use of derivative trading services provided by Huobi’s website is prohibited for anyone in mainland China, Taiwan, Israel, Iraq, Bangladesh, Bolivia, Ecuador, Kyrgyzstan, Sevastopol and the United Kingdom for retail users only. </li>
 <li>This update follows last week’s news that Huobi’s Twitter account vanished but reappeared later in the week.</li>
 </ul>
 
</div>



Huobi, a bitcoin and ethereum trading platform, is no longer permitting Chinese-based users to trade derivatives on its website, according to its <a href="https://www.huobi.com/support/en-us/detail/360000298561" target="_blank" rel="noreferrer noopener">updated user agreement</a> notice. 



China was added to the list of unlawful jurisdictions for its derivatives trading service, but its users can still access the exchange platform and spot trade, according to the updated fine print on June 26.



“The Company may suspend or terminate your account or use of the Service, or the processing of any digital asset transaction, at any time if it determines in its sole discretion that you have violated this Agreement or that its provision or your use of the Service in your jurisdiction is unlawful,” it said.&nbsp;



Use of services is prohibited for people in the United States, Canada, Hong Kong, Japan, Cuba, Iran, North Korea, Sudan, Syria, Venezuela and Crimea, it said. Meanwhile, the use of derivative trading services provided by Huobi’s website is prohibited for anyone in mainland China, Taiwan, Israel, Iraq, Bangladesh, Bolivia, Ecuador, Kyrgyzstan, Sevastopol and the United Kingdom for retail users only, the company said.&nbsp;&nbsp;



The list of countries or regions under prohibited restrictions can change due to new products or policies, according to the user agreement.&nbsp;



This update follows last week’s news that Huobi’s Twitter <a href="https://cms.blockworks.co/huobi-blames-unauthorized-access-attempt-for-twitter-outage/" target="_blank" rel="noreferrer noopener">account vanished</a> but reappeared later in the week. After the incident, the company tweeted a <a href="https://twitter.com/HuobiGlobal/status/1408015811004887040?s=20" target="_blank" rel="noreferrer noopener">statement</a> that “everything is back to normal,” and added, “currently there are many rumors floating out there in the world of crypto. Huobi assures that we are operating under fully legal and compliant standards to best protect users and your assets.”



When the account disappeared it led many to think that Seychelles-incorporated, but Hong Kong-listed Huobi had been caught in the crosshairs of the territory’s regulators, Blockworks previously <a href="https://cms.blockworks.co/huobi-blames-unauthorized-access-attempt-for-twitter-outage/" target="_blank" rel="noreferrer noopener">reported</a>. 



In general, <a href="https://cms.blockworks.co/hong-kongs-digital-assets-double-standard/" target="_blank" rel="noreferrer noopener">Hong Kong</a> and Beijing have been cracking down on crypto. Hong Kong <a href="https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/hong-kong" target="_blank" rel="noreferrer noopener">restricts exchanges</a> to professional investors only — Huobi opens its doors to everyone — and while the firm is Seychelles registered, it is publicly listed on the Hong Kong exchange.



Separately, earlier this month, securities regulators in Thailand, as part of the country’s broader crackdown on crypto offerings with “no clear objectives or substance”, ordered Huobi to cease operations until it cleans up its organizational structure and reconfigures its offerings to become compliant with local regulatory standards, Blockworks previously reported.

Huobi Bans Chinese-Based Users From Trading on App

<div id="highlights-block_60d4ffc270f69" class="highlights">
 <ul>
 <li>Huobi’s Twitter account appeared to vanish earlier this week, which led many to speculate that the exchanges days were numbered </li>
 <li>While the exchange made changes to derivatives rules for China-based traders, it says its business as usual</li>
 </ul>
 
</div>



Huobi’s Twitter account is back online after vanishing earlier in the week, and the exchange says that “everything is back to normal.”



“Earlier there was an unauthorized attempt on our account, and it was frozen to ensure user safety,” <a href="https://twitter.com/HuobiGlobal/status/1408015811004887040" target="_blank" rel="noreferrer noopener">the exchange wrote in a Twitter update</a>. “Currently there are many rumors floating out there in the world of crypto. Huobi assures that we are operating under fully legal and compliant standards to best protect users and your assets.”



When the account disappeared it led many to think that Seychelles-incorporated, but Hong Kong-listed Huobi had been caught in the crosshairs of the territory’s regulators.



Hong Kong, <a href="https://cms.blockworks.co/hong-kongs-digital-assets-double-standard/" target="_blank" rel="noreferrer noopener">in theory an autonomous territory</a>, has been cracking down on crypto alongside Beijing. Hong Kong<a href="https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/hong-kong" target="_blank" rel="noreferrer noopener"> restricts exchanges</a> to professional investors only — Huobi opens its doors to everyone — and while the firm is Seychelles registered, it is publicly listed on the Hong Kong exchange. 



A source at an Asia-based trading and research firm that spoke to Blockworks said that regulators in China have taken concern with the amount of leverage offered to users. New users that onboard onto the platform aren’t able to trade leveraged derivatives, and existing users can only use a maximum of 5x leverage.&nbsp;



The source also said that the volatility of the market has put some stress on the exchange, and there have been issues with withdrawals. He explained that as bitcoin is “range bound” — a phenomenon where the asset’s price bounces between a specific high price and a low price finding strong resistance on both sides — this had to be done to mitigate internal risk.&nbsp;&nbsp;



Both Hong Kong’s Securities and Futures Commission, its markets regulator, and the Hong Kong Monetary Authority, its central bank, declined to comment on inquiries about an ongoing investigation into Huobi. <a href="https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/" target="_blank" rel="noreferrer noopener">Neither authority</a> has <a href="https://www.hkma.gov.hk/eng/news-and-media/press-releases/enforcement" target="_blank" rel="noreferrer noopener">publicly announced</a> that they are pursuing enforcement actions against the exchange either. 



Earlier this month, securities regulators in Thailand, as part of the country’s broader crackdown on crypto offerings with “no clear objectives or substance”, ordered Huobi to cease operations until it cleans up its organizational structure and reconfigures its offerings to become compliant with local regulatory standards.



Huobi, for its part, is planning to re-enter the market with a different name and product offering later in the year and has given its current clients <a href="https://www.bangkokpost.com/business/2133743/huobi-users-told-to-withdraw-assets-by-aug-31" target="_blank" rel="noreferrer noopener">until August 31</a> to withdraw all assets from its Thai platform.