Chinese Crypto Mogul Li Sells Stake in Exchange Firm Huobi

(Bloomberg) -- Huobi Global said controlling shareholder Leon Li sold his entire stake in the cryptocurrency exchange operator and will cease to be involved in its operations.

Li sold his holding in Huobi to a buyout firm managed by About Capital Management (HK)Co., the company said in an emailed statement. The co-founder will no longer be involved in any aspect of Huobi Global’s business, according to a Huobi spokesperson. Bloomberg reported the intended sale in August.

Once the most active Bitcoin trading platform on the globe, Huobi has in recent years retreated from China, its biggest user base and revenue source at one time. Li’s exchange stopped providing services to Chinese users after Beijing declared crypto transactions illegal last year.

The bourse has since accelerated its expansion into overseas markets including Turkey and Brazil, but is fighting bigger rivals such as Binance and FTX. As of Saturday, it was ranked eighth in 24-hour volume among exchanges with a top “trust score” of 10 for the legitimacy of its data, according to tracker CoinGecko.

“Following Huobi’s exit from the Chinese mainland market in 2021, we have accelerated our globalization push amidst a challenging market environment, which adds to the impetus for Huobi to seek a new shareholding structure with a global vision and international resources,” Li said in the statement.

The transaction has no impact on Huobi’s core operations and business management teams, the company said.

After the transaction, Huobi Global will enact a series of initiatives including the injection of sufficient capital in margin and risk provision funds, as well as measures to further enhance competitiveness and compliance procedures, a spokesperson said.

“We believe the virtual asset industry is still in its early stage and there is tremendous upside for long term growth,” said Ted Chen, chief executive officer of About Capital, in the statement. Chen founded About in 2008 and previously was a founding partner of China investment manager Greenwoods Asset Management. “We are confident that the holistic approach to rebuild Huobi Global as the premier international virtual asset exchange would solidify both the recognition and trust of Huobi’s international users.”

Huobi was co-founded in 2013 by former Oracle Corp. coder Li, who quickly transformed the Beijing startup into the world’s most active Bitcoin exchange by charging zero transaction fees. In 2017, Chinese regulators told local exchanges to stop hosting trades between fiat and digital money, the first of a stream of pronouncements that quelled a perceived threat to the country’s financial stability.

Li had at different times ceded daily management as he dealt with health issues. The current chief executive officer is Hua Zhu, an ex-Alibaba Group Holding Ltd. technologist who joined Huobi in 2020.

In an interview for a 2020 Bloomberg News report, Li said he had never received any official notice barring him from leaving China but he’s chosen not to, unsure of the risks that would entail.

(Updates with rank in fourth paragraph, and Huobi comment and Chen quote.)

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