This is bad news that the cryptocurrency industry can do without.
This information shows that the very difficult period that the Blockchain-dominated financial services industry is going through is still far away.
Cryptocurrency exchange Huobi has just announced a 20% reduction in labor in a general move to reduce costs to cope with the fall in cryptocurrency prices.
“With the current situation bear marketa very lean team will continue to move forward,” a Huobi spokesperson told Reuters news agency.
The company employed about 1,600 people at the end of October. However, it is difficult to say exactly how many jobs will be eliminated because we do not have new figures.
Huobi Token is affected
Huobi, which is based in Seychelles, is one of the largest cryptocurrency exchanges. According to the data company CoinGeckothe platform recorded about $318 million in trading volume in the last 24 hours.
The announcement of the reduction of the workforce has resulted in HT, the original token or cryptocurrency issued by the Huobi ecosystem. HT is down 7% in the last seven days.
The company was founded in China in 2013 but had to be liquidated after Beijing launched a crackdown on the crypto industry. As a result, Huobi currently only has consulting and research activities in mainland China while its trading activities are outside the country. It has offices in Hong Kong, South Korea, Japan and the US
The company is owned by About Capital Management, an asset management company based in Hong Kong.
Huobi, like all cryptocurrency exchanges, became the subject of doubts and mistrust about its solidity after the unexpected bankruptcy of FTX. Considered one of the most powerful companies in the crypto space after being valued at $32 billion in February, FTX, founded by Sam Bankman-Fried, went bankrupt on November 11 unable to meet massive withdrawal requests from customers.
Since then, the smell of suspicion surrounds the rest of the exchange. Binance, the world’s largest cryptocurrency exchange, was the subject of many rumors in December, leading panicked customers to withdraw $6 billion from December 12 to December 14, a spokesperson told TheStreet at the time.
The suspicions were strengthened by the decision of the audit firm Mazars to cut ties with all crypto companies.
Mazars said in December that it “pauses its activities related to the provision of reserve evidence reports for entities in the cryptocurrency sector due to concerns about the way these reports are perceived by the public.”
The purpose of the reserve proof audit is to show that the crypto company has enough reserves to deal with the issues from clients and investors. This audit is also intended to increase public confidence and demonstrate transparency when most crypto companies are not regulated, which means they are not transparent and investors and clients can only rely on what top executives say.
Billionaire Mark Cuban has further warned in an interview with TheStreet of the possible implosion of the illegal practice of laundering trade which is expected to significantly affect the centralized exchange.
“I think the next possible implosion is the discovery and elimination of wash trades on the central exchange,” the Dallas Mavericks owner told TheStreet in an email interview. “There must be tens of millions of dollars in trade and liquidity for tokens that have low usage. I don’t see how he can be that fluid.
Laundering, an illegal practice, involves creating artificial interest around financial products – crypto tokens or coins in this case – for profit. This form of “pump-and-dump” scheme is widespread in the cryptocurrency industry.
While many laundering trades have occurred in traditional finance, the crypto space is particularly conducive to the practice as nearly 13,000 cryptocurrencies are registered, according to data company CoinGecko. Scammers must make one or the other token out of the package in order to participate in the wash trade.
As an example, according to a 2022 study by Forbes magazine on 157 centralized cryptocurrency exchanges, more than half of the exchange volume on bitcoins is fake.