New Huo Technology stares at US$18m hit after FTX collapse

Hong Kong-based New Huo Technology (1611), formerly known as Huobi Technology, saw its shares tumble by 14.4 percent yesterday after the digital asset services provider said it has US$18.1 million (HK$141.2 million) worth of cryptocurrencies deposited in the bankrupt crypto exchange FTX.

Among the assets, nearly US$13.2 million is the client's asset based on the clients' trading request and approximately US$4.9 million is the asset of its subsidiary Hbit, the company said in a filing yesterday.

Bahamas-based FTX filed for bankruptcy last Friday after a rush of customer withdrawals earlier last week.

In the interest of the shareholders and the company as a whole, New Huo Technology will engage legal advisers to make inquiries into FTX and continue to take all appropriate steps to liaise with the crypto exchange to withdraw the crypto assets as soon as possible, the filing said.

The incident currently does not affect its normal business operations as the unit Hbit is legally and operationally separated from other business entities of the company, and its other assets and business lines will not be affected, it stated.

However, New Huo anticipates that its financial performance might be materially and adversely affected in the event that the incident is not resolved.

Meanwhile, its controlling shareholder and non-executive director Li Lin has agreed to provide the firm with an unsecured facility of up to US$14 million, which will be utilized to cover client asset liability arising from the incident if necessary, the company said.

Li is the founder of Huobi Group, one of the world's largest cryptocurrency trading exchanges, and owns over half of the stake in New Huo Technology.

In October, Li sold its interest in Huobi Group to Hong Kong-based About Capital Management. Later in the month, Huobi Technology changed its name to New Huo Technology.

Huobi Group wrote in a tweet yesterday that "New Huo Tech are independent entities" and the operations of Huobi are normal.

Reuters reported earlier that at least US$1 billion of customer funds have vanished from the collapse of FTX, following a spike in outflows across global crypto exchanges.

Users yanked a net of US$3.7 billion worth of Bitcoin and US$2.5 billion of Ether in the week from November 6 to November 13, according to data provider CryptoQuant.