- Sun called Binance a valuable partner but insisted he made no offer to sell Huobi.
- According to reports, Binance refused Sun’s offer.
- Earlier this year, Sun announced that Huobi would cut 20% of its staff.
Amid mass layoffs and an SEC lawsuit against its founder, Houbi has seen better days.
Tron founder Justin Sun has denied rumors he is attempting to sell his ownership stake in Huobi to Binance. On Thursday, he assured Huobi users that the exchange has no intention of changing ownership.
Sun claimed he had not proposed any offer to Binance CEO Changpeng Zhao about the purchase of Huobi.
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“We have always regarded Binance as one of our most important partners and will continue to work closely with them on all levels,” said Sun. However, he added that he had never even discussed Huobi with CZ “in the past week or so.”
Sun’s denial comes in response to reports by Coinbase and other outlets, citing anonymous sources that referenced the purported deal. According to Coinbase, Binance had no interest in buying Huobi due to its alleged ties to China.
Apparently, Binance believed that acquiring Huobi would exacerbate its already severe regulatory issues in the US. The exchange faces a lawsuit from the Commodity Futures Trading Commission for operating an unregistered exchange in the US.
At the same time, Huobi is facing its own troubles. The Securities and Exchange Commission named Huobi in a landmark lawsuit against Justin Sun. The lawsuit involved numerous celebrities, including Lindsay Lohan and Jake Paul, for promoting Tron.
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Justin Sun’s official capacity at Huobi is that of an adviser. However, the crypto moghul often speaks on behalf of the exchange. Reports suggest that he is the majority owner, having acquired a controlling stake for $1 billion.
Trouble in Huobi
Sun’s motivations for selling the exchange are unclear. But if the rumors are true, they may be connected to recent issues in Huobi.
In January, reports of trouble in Huobi surfaced as the exchange saw a spike in outflows. Employees claimed that the exchange canceled all year-end bonuses, cut some employees’ salaries, and made employees accept salaries in stablecoins.
Soon thereafter, Sun said the company would lay off 20% of its employees, citing restructuring efforts. Like many tech and crypto firms, Huobi suffered due to a changing macroeconomic environment.
On the Flipside
- Sun did not say he never talked to CZ about selling Huobi. He just said that he never talked about Huobi with CZ in the past few weeks.
- Binance faces a lawsuit from the Commodity Futures Trading Commission for operating an unregistered exchange in the US.
Why You Should Care
Binance’s apparent disinterest in buying Huobi highlights its concern over regulatory crackdown. It also reveals a systemic risk for Huobi due to a lack of potential buyers in case of insolvency.
Read more about Binance’s regulatory troubles in the US:
Binance Lawsuit Explained: Why CFTC Involvement Is a Big Deal
Read about Sun’s lawsuit with the SEC:
Lindsay Lohan, Jake Paul Fined $400,000 for Tron (TRX) Promo
