Leon Li, co-founder of Huobi (HTX) exchange, has successfully reclaimed deposits previously blocked in the bankrupt cryptocurrency exchange FTX. His Hong Kong-based investment holding company Sinohope, through its subsidiary Hbit, managed to retrieve over 100% of the frozen assets. On May 24, Hbit finalized a deal selling creditor claims worth $19.5 million to Ceratosaurus Investors LLC, a debt investment firm.
What’s Happening at Huobi?
During FTX’s bankruptcy in November 2022, Sinohope had $18.1 million trapped. The new agreement allows the recovery of 108% of these assets. Sinohope faced significant financial challenges due to the unrecovered funds, projecting a loss of 280 million Hong Kong dollars for the first nine months of 2023. This included corporate deposits worth $86 million Hong Kong dollars left dormant in FTX.
To mitigate the impact, Leon Li offered a $14 million personal credit line to support Sinohope customers affected by the FTX collapse. Additionally, on December 11, 2023, Li’s other company, X-Spot Global, secured an injunction against Huobi Global to cease the use of the Huobi brand’s Chinese equivalent in Hong Kong.
Details of the Process
Court documents indicate that the Huobi brand was registered in Hong Kong in 2019. By September 2022, Leon Li and Du Jun had sold Huobi Global to About Capital Management, linked to Justin Sun. Before this transaction, rights to the Chinese Huobi brand were transferred to Leon Li’s X-Spot Global, making it the brand owner. Subsequently, Huobi rebranded to HTX in September.
Key Insights from the Case
– FTX’s bankruptcy had a significant financial impact on Sinohope, necessitating personal financial intervention from Leon Li.
– The rebranding of Huobi to HTX was tied to legal actions and ownership transitions involving the Huobi brand.
– The sharp rise in cryptocurrency prices amid a bull market has increased the value of claims by FTX creditors, with recovery estimates ranging between 129% and 143%.
The resolution of this case marks a pivotal moment for those affected by FTX’s bankruptcy, demonstrating recovery possibilities in the volatile crypto market.