Huobi grapples with rumours of employee arrests, insolvency and fraud in roller coaster week for crypto world

Huobi Global, a cryptocurrency exchange founded in mainland China with a large presence in Hong Kong, is grappling with a torrent of rumours surrounding alleged arrests of employees, insolvency and fraud that triggered a roller-coaster ride in the crypto market over the past week.

The drama began on Saturday when blockchain news website Wu Shuo reported that several crypto exchange executives had been investigated by mainland police. Soon after, Hong Kong-based Techhub News reported that at least three executives from Huobi had been taken away by mainland police as part of an investigation, with other employees asked to leave the country. The report cited unnamed sources.

Huobi denied the allegations in an email to the Post. A spokeswoman said the company had asked those websites to remove and correct “misinformation”, adding that it reserved the right to take legal action.

The allegations come as Huobi is set to face scrutiny from regulators in Hong Kong, where it plans to apply for a virtual asset trading licence under the city’s new crypto regime.

Hong Kong’s financial regulator on June 1 launched a new virtual asset trading provider (VATP) licensing regime, giving crypto exchanges a one-year window to apply for a licence, or to leave the market. The licensing requirements cover a broad range of areas including user onboarding, asset custody, cybersecurity and corporate governance.

A Huobi official on Monday said the exchange still intends to apply for a VAT licence, but has yet to submit an application form. The exchange had previously begun onboarding retail traders on its newly launched Hong Kong trading app.