Sebastian Sinclair

Malaysia’s securities regulator said Monday it has taken action against Huobi Global and its CEO, Leon Li, for operating a crypto exchange without prior registration.



The Securities Commission Malaysia (SC), which oversees the regulation of securities and digital assets, issued a <a href="https://www.sc.com.my/resources/media/media-release/sc-takes-enforcement-action-against-huobi-global-for-illegally-operating-dax-in-malaysia" target="_blank" rel="noreferrer noopener">public reprimand</a> denouncing Huobi for operating “illegally.” 



The agency first <a href="https://twitter.com/SecComMalaysia/status/1561662707572822017" target="_blank" rel="noreferrer noopener">placed</a> Huobi on its investor alert list last year for operating without registering as a &#8220;Recognised Market Operator, viewed as a serious offence under the Capital Markets and Services Act.



The SC has directed Huobi to stop all activities in the region, disable its website and mobile apps across various platforms such as Apple and Google app stores. It also must stop promotional activities targeting local investors.



“The SC urges Malaysian investors who have been using Huobi Global Limited to immediately cease trading through its platform, withdraw all their investments and close their accounts,” the agency said.



The SC and Huobi Global, which is headquartered in the Seychelles, did not immediately respond to Blockworks’ request for comment. Advisor Justin Sun earlier this year suggested Huobi sought to relocate its Asian headquarters to Hong Kong from Singapore.



The SC urged investors to only interact with market operators registered with the regulator. “Those who invest with unlicensed or unregistered entities or individuals are exposed to risks such as fraud and may not be protected under Malaysian securities laws,” the notice said.



“Investors should be wary of investment schemes that promise high returns with little risk, as they may be too good to be true,” the regulator said. “By taking these precautions, investors can safeguard their investments and avoid falling victim to fraudulent schemes.”



There are <a href="https://www.sc.com.my/regulation/guidelines/recognizedmarkets/list-of-registered-digital-asset-exchanges" target="_blank" rel="noreferrer noopener">currently</a> only four crypto companies registered as market operators in Singapore, including <a href="https://blockworks.co/news/dcg-genesis-gemini-debt" target="_blank" rel="noreferrer noopener">Digital Currency Group</a>&#8216;s Luno and MX Global, per the SC website.



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Huobi Ordered To Stop Operating in Malaysia

Shalini Nagarajan

<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 class="wp-block-heading">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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