Crypto exchange Huobi to cut staff 20% in 'bear market'

Representations of cryptocurrencies Bitcoin, Ethereum and DogeCoin are placed on PC motherboard in this illustration taken
Representations of cryptocurrencies Bitcoin, Ethereum and DogeCoin are placed on PC motherboard in this illustration taken, June 29, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
  • Citing bear market, expects 'very lean team'
  • Staff cuts expected to be completed by end of first quarter
  • Industry expert says cost cuts do not fix underlying problems

SINGAPORE, Jan 6 (Reuters) - Crypto exchange Huobi plans to lay off about 20% of its staff, the company told Reuters on Friday, in the latest instance of cost-cutting in the industry as investor interest in digital assets wanes.

"The planned layoff ratio is about 20%," Huobi said in a statement, responding to queries from Reuters.

"With the current state of the bear market, a very lean team will be maintained going forward."

The statement confirmed an earlier message from Tron founder Justin Sun, who said that the "structural adjustment" in Huobi had not started yet but was expected to be completed by the end of the first quarter.

Sun said the company has 1,100 employees now.

Sun, a Chinese cryptocurrency entrepreneur who is also a member of Huobi's global advisory board, said in an internal memo to Huobi staff that the company has been like "a fire in the (crypto) winter" despite the deteriorating macro environment.

He added that the platform has had an average of 20,000 new daily users the last three months.

Separately, blockchain data firm Nansen said in a tweet on Friday that in the last 24 hours, Huobi saw "a significant increase" in net outflows.

Of the $94.2 million in net outflows over the last week, $60.9 million of it occurred in the last day, the tweet said.

Huobi was ranked the eighth largest crypto exchange in terms of volume as of last November, according to analytics website CoinGecko.

Sun described the restructuring as short-term pain that can eventually bring advantages to the exchange.

Across the sector, concerns are high about about reserves and solvency after bankruptcies last year, including the collapse of FTX.

Cryptocurrency firm Genesis cut 30% of its workforce in a second round of layoffs in less than six months, while crypto-focused bank Silvergate Capital Corp (SI.N) reported a sharp drop in its fourth-quarter crypto-related deposits.

"All these companies are resorting to cost-cutting measures ... Instead of plotting the ship through turbulent times, these executives have simply cut people," said Joshua Chu, group chief risk officer at blockchain technology firms XBE, Coinllectibles and Marvion.

"Cutting people will not help these tech companies with solving the inherent problem in that they need to make products with underlying value."

Last year, Huobi founder Leon Li sold his controlling stake in the company to buyout firm About Capital Management (HK) Co.

According to CoinMarketCap, the Huobi Token peaked at $9.40 in late October, with a 24-hour volume then of $52.50 million. Its price on Friday was $4.68, and volume was down to $20.53 million.

Reporting by Xinghui Kok and Rae Wee; Editing by Kim Coghill and Barbara Lewis

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Xinghui leads the Singapore bureau, directing coverage of one of the region’s bellwether economies and Southeast Asia's main financial hub. This ranges from macroeconomics to monetary policy, property, politics, public health and socioeconomic issues. She also keeps an eye on things that are unique to Singapore, such as how it repealed an anti-gay sex law but goes against global trends by maintaining policies unfavourable to LGBT families. Xinghui previously covered Asia for the South China Morning Post and has been in journalism for a decade.