Huobi Group Founder Seeks to Sell Huobi Stake for $3 Billion

Huobi Group

Leon Li, the founder of Huobi Group, is in discussions with a group of investors to sell his controlling ownership in the crypto-exchange at a valuation of up to $3 billion, in what might be the industry’s largest acquisition since a $2 trillion global crypto sell-off began.

Huobi Stake

According to people with knowledge of the situation, the Chinese crypto-mogul has held negotiations with several bankers to sell around 60 percent of the company he created a decade ago. Tron founder Justin Sun and crypto-billionaire Sam Bankman-FTX Fried are among others who have initiated communication with Huobi regarding a share transfer, according to persons who requested anonymity to discuss private information.

Existing investors, including ZhenFund and Sequoia China, were notified of Li’s decision during a shareholder meeting in July, according to individuals. A deal could be finalized by the end of this month, according to one individual. People noted that Li is seeking a valuation of between $2 billion and $3 billion, implying that a sale might yield more than $1 billion.

A representative for Huobi acknowledged that Li is negotiating the stake sale with multiple international organizations, but declined to provide further details. He stated that “He hopes that the new shareholders will be more powerful and resourceful and that they will value the Huobi brand and invest more capital and energy to drive the growth of Huobi.”

A spokeswoman for FTX declined to comment, while Sun stated through text message that he has not discussed a sale with Li. In recent years, Huobi, formerly the most active Bitcoin trading site on the planet, has retreated from China, previously its largest user base and revenue source. After Beijing deemed crypto-transactions illegal last year, Li’s exchange ceased offering services to Chinese users. Since then, the bourse has expanded its expansion into international areas, including Turkey and Brazil, while competing with larger rivals such as Binance and FTX.

Uncertain is whether a takeover could involve Hong Kong-listed Huobi Technology Holdings Ltd., an affiliate authorized by Hong Kong’s securities regulator to manage digital assets for professional investors. After Bloomberg’s first report, shares of Huobi Technology reversed losses and rose as much as 5.7%. According to CoinGecko data, the price of Huobi’s HT token increased by as much as 25% after the news.

According to data aggregator CoinGecko, Huobi processed around $1.12 billion in crypto transactions in the 24 hours preceding August 12th, a bit more than half of the trades facilitated by Coinbase Global Inc. With a price-to-earnings ratio of 18.6, the US exchange is valued at around $19 billion.

Some of the industry’s wealthiest financiers are seizing the opportunity presented by the market collapse to acquire inexpensive stocks.

FTX, for its part, has committed almost $1 billion to a spending binge, saving companies such as Voyager Digital LLC and BlockFi Inc. Sun, the controversial founder of the Tron blockchain network, has already acquired crypto companies such as Poloniex and BitTorrent.

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