Huobi Australia has announced on social media that its office will close as of 26th February 2019. All operations will transfer to Huobi Global headquarters in Singapore. The company blames the closure on “poor market conditions and associated recent staff redundancies.”
Gone From A Land Down Under
Top ten cryptocurrency exchange by volume, Huobi, only established its Australian operation eight months ago.
At the time the fourth largest exchange, it was competing in an aggressive global expansion battle with the other top exchanges. But it seems that, for the relatively small Australian market, this turned out to be too much for too little.
The continuation of the cryptocurrency bear market has clearly taken its toll on expectations from the performance of the Australian subsidiary. While operations will not cease, management of the platform, social media channels, and customer support, will now happen from Huobi’s Singapore HQ.
Still Making Profit, But Cutting Staff
The first indication that the prolonged downturn in cryptocurrency prices was starting to bite came a month ago. Huobi cut around 100 staff from its global workforce of 1400, saying that:
We do not know how long the bear market will last, so […] We have to plan in advance and spend money carefully.
It seemed that the company was planning particularly well in advance, as CEO, Livio Weng Xiaoqi, admitted at the time that revenues were still in the positive every single month.
However, Huobi did spend a lot of money on industry development and promotion last year. Cutting unprofitable departments such as venture funding and news aggregation was perhaps inevitable. The Australian office appear to have found themselves on the wrong side of this belt tightening.
No AUSTRAC Required
The move also means that Huobi Australia have ‘decided not to explore adding a fiat on-ramp,’ instead sticking with crypto-to-crypto. This means they do not require an AUSTRAC registration. The Australian Transaction Reports And Analysis Centre is a government financial intelligence agency. Its role is to identify money laundering, organised crime, tax evasion, welfare fraud and terrorism.
It is possible that the decision to close the Australian office relates to this registration.
Whilst there is no suggestion that Huobi is involved in any of the mentioned activities, reports from the Blockchain Transparency Institute allege widespread wash-trading. In fact, Huobi come third on the Institute’s Exchange Advisory List, with an estimated 86.91% of volume through API trading.
Should companies be extra frugal in this bear market? Share your thoughts below!
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