Finance
Huobi’s Future Is In Doubt As Harsh Layoff Allegations Are Rejected
The cryptocurrency market is experiencing the biggest crash of the decade. Market capitalization is being eroded, and cryptocurrency prices are hitting the lowest value over time.
The currency and macroeconomic aggregates are not favorable to support the future growth of the tokens. Many crypto exchanges are now categorized as defunct. One of the names that top such a list is Huobi.
Huobi has been an active crypto exchange witnessing a trading volume of USD 485,856,852 in the last financial year. The exchange has been doing well up until now. It supported around 120 crypto tokens and coins with an active investor base of 8500 million investors.
However, it seems to step into troubled waters now as the market has been significantly downsized. The investors have been losing their cumulative net worth and secured assets, which back these crypto tokens.
How Has The Performance Of This Crypto Exchange Been Impacted?
Justin Sun has recently addressed these concerns in the capacity of the adviser of Huobi. He has reaffirmed that the crypto exchange continues to be the largest trading platform in crypto assets.
The derivatives perform well, and the users are protected against the pledged assets. The exchange has expanded its bandwidth owing to the rise in investors since the beginning of 2023.
However, speculation continues to mount as the trading volume keeps reducing to hit the lowest value on Friday. The average reported price hike has turned negative. The exchange has to witness an erosion of USD 85,000 million in the first week of 2023 itself.
The investors look forward to exiting their trades executed on this exchange as soon as possible. This is in tune with the impending perils of derailment of the exchange market.
Huobi is all set to witness the harshest layoff. Rumors are underway that the exchange will be laying off around 34% of its staff by the end of the second quarter of 2023. This is in line with the reduced operations over the exchange.
This is the first time that the exchange has taken such a decision. It is imperative to downsize the workforce to cope with the operational expenses of the exchange.
What Do The Statistics Say About The Exchange?
The exchange has reported losses worth billions for the third quarter consecutively. It has been further coupled with the withdrawal of the investors. The revenue has slashed to its lowest valuation in the recent past.
The losses have almost doubled. The exchange has a debt burden of around USD 12,000 million with an added interest rate of 17% compounded annually. These calculations are making it difficult to sustain a large workforce in the times to come.
The salaries and remunerations comprise 45% of the operational expenses of the exchange. Reduction in the workforce would reduce the proportion of these expenses by another 56% which would save millions for the exchange.
This fund could then be reinvested to expand the exchange operations and increase the market wealth. It would also help to reduce the burden of debt on the exchange, which is an insurmountable barrier for the time being.
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What Prospects Are In Store For The Exchange?
The executives and officials of the exchange are repeatedly denying the purported possibility of ending into an insolvency lawsuit.
However, there are no facts and figures to back these claims and offer confidence to the investors to continue holding their stakes in the exchange. Market researchers have advised investors to withdraw their funds from this exchange as soon as possible.
The financial statements and the accounts are currently clogged with red flags. The situation is disappointing for attracting a new base of investment.
The company executives have been planning to roll out the new schemes and initiatives; however, everything continues to be in black and white for the time being. The investors resist giving up their holdings, but the market conditions force them to perform such an act.
Huobi has also shut down its internal communications, and many offices are currently not operational for want of staff members.
The exchange plans to execute and settle the trades through the cloud platform to further cut down on expenses. The future is bleak, but there is always hope for correction to turn the tables and set the situation right again.
Conclusion
This is one of the first instances. The economy has been going through the worst phase for the time being. That is why in such a situation.
The crypto market continues to take a toll on investments. The vitality and the volatility of the market accompanied by price fluctuations have been responsible for the uncertainty in the future of the trade.
