Huobi is dissolving an entity in Beijing founded in 2013 to manage its cryptocurrency exchange, originally based in China.
Collapse of the shares
According to Chinese business records, Beijing Huobi Tianxia Network Technology Limited stakeholders passed a resolution to dissolve the company, issuing a notice on July 22. Li Lin, founder and CEO of Huobi Group, which also controls Beijing Huobi, is the person responsible for the clearing and liquidation process.
The notice didn't attract the attention of the wider public until Tuesday, when Chinese crypto media began reporting on the dissolution. The share price of Huobi Tech, another Hong Kong-listed subsidiary of Huobi Group owned by Li, plunged a whopping 21,88% during trading hours on Tuesday.
Huobi's move comes just a month after Beijing Lekuda, founded by OK Group's Star Xu in 2012 to manage the OKCoin exchange, then Huobi's rival, also filed for dissolution.
Huobi and OKEx's cryptocurrency trading services will not be affected since the two moved their exchange businesses out of China years ago. But the decisive decisions come at a time when China is stepping up efforts to crack down on both cryptocurrency trading and mining operations within the country.
Based on court rulings related to multiple legal disputes involving Beijing Lekuda and Beijing Huobi Tianxia, the two entities have operated the Huobi and OKCoin exchanges in China since their inception. This ended when the People's Bank of China issued the ban in September 2017 on initial coin offerings and centralized fiat-to-crypto trading.
Since then, both exchanges have moved their businesses overseas, although they still have significant user bases in China with employees also stationed in the country. The two entities were also used to register and manage the now suspended Weibo accounts of the Huobi and OKEx exchanges.
A spokesperson for Huobi said that since the Beijing entity "did not have any commercial activity, it is not necessary and called for cancellation".
They did not specify what the deal will be for its China-based staff, but said the exchange is "committed to its globalization process as it continues to hire employees from countries around the world."
"In addition to enabling Huobi to better meet the needs of its many international users, Huobi believes that doing so will also improve its ability to ensure business continuity around the world," they added in a statement.