3 - 6 minute read
Crypto exchange Huobi has returned to profitability in Q1 2023 following restructuring efforts to reduce costs and increase efficiency. According to Justin Sun, the de facto owner of Huobi Global, the exchange earned $150 million in revenue during Q1, surpassing its $120 million in expenditures, achieving a $30 million net income. Sun stated that “a large number of measures were taken to reduce costs and increase efficiency” during the quarter which led to the profits.
Huobi Global, previously one of the largest cryptocurrency exchanges by volume, saw a decline in its market share, falling from 19% in 2020 to an estimated 2.2% in Q4 2022. This decline began after the off-boarding of its Mainland Chinese users in 2021. Nevertheless, Sun, who claims to be an “adviser” at Huobi Global, reportedly purchased 100% of the exchange’s stake from co-founders in November 2022 via his entity About Capital.
Earlier this year, Huobi Global laid off 20% of its employees and slashed employment benefits as part of restructuring, which included reducing costs. A major incident affected the cryptocurrency exchange on Mar. 10 when their native token, Huobi Token (HT), suffered a flash crash that caused it to drop more than 90% within hours. Subsequently, Huobi pledged to compensate users who were impacted by the crash, including Twitter user Lantian666, who claimed to have lost $4 million due to margin liquidations on HT. While Sun had promised full compensation, Lantian666 is still waiting to receive it.
As Huobi returns to profitability, traders might be wondering what this means for the asset in question. While the restructuring efforts have undoubtedly played a significant role in boosting the exchange’s revenue, traders should keep in mind that the cryptocurrency market remains highly volatile. Additionally, the flash crash of Huobi Token raises concerns about risk management, which may affect the exchange’s future performance. Therefore, traders should do their due diligence before investing and be mindful of risk management.
Increased Efficiency and Reduced Costs
Huobi Global struggled with a declining market share after it expelled its Mainland Chinese users in 2021, which led to a decrease in trading volume. However, the exchange’s strong restructuring efforts to reduce expenses and improve efficiency have led to a rise in profits as it returns to profitability in Q1 2023. Justin Sun, the de facto owner of Huobi Global, reportedly purchased 100% of the exchange’s stake from co-founders through his entity About Capital, and he claims to have made “a large number of measures” to reduce costs during the quarter.
Crash Raises Concerns about Risk Management
Huobi Global experienced a significant incident on Mar. 10 when Huobi Token (HT) experienced a flash crash that led to it losing over 90% of its value within hours. While Sun has promised full compensation to affected users such as Lantian666, the incident raises concerns about the cryptocurrency exchange’s risk management protocol. Traders should keep this in mind when deciding to invest in Huobi Global or its affiliated assets.
Dear colleagues in the crypto circle, I am the owner of the account that was forcefully liquidated for 4 million dollars on March 10th at 5:00 am by the Huobi platform's HT pin liquidation. I will continue to share all the details and what Huobi did at that time #ShameonHuobi pic.twitter.com/HzDf7xE2Gv
— nnn (@lantian6666) March 26, 2023
Huobi’s return to profitability is good news as it suggests that the exchange’s restructuring efforts to reduce expenses and improve efficiency are bearing fruit. Traders should keep in mind that cryptocurrency markets remain highly volatile and should always do their due diligence before investing. Additionally, risk management protocols must be given top priority to reduce the likelihood of incidents such as the one that occurred with Huobi Token.
