Huobi forces conversion of user assets to debt currency "Hoo USDT," requires 27 years to break even on profit plan
Huobi Exchange plans to convert all user assets to the stablecoin HUSDT (Hoo USDT) and restrict trading to the innovative startup zone. This move is expected to trigger a run and significant discount upon launch. Opting for an alternative "profit-making plan" may take several years to recover the principal.
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Withdrawal Restrictions Starting from June
Since June, a series of liquidity crises have emerged in CeFi, starting with Celsius, and the Huobi exchange HOO gradually began to restrict user withdrawals by the end of June:
Citing clearing crises at major institutions and an accumulation of excessive withdrawal demands on the platform, Huobi delayed user withdrawals by 24 - 72 hours.
6/22 Only Allows Withdrawals of Anonymous Competitive Coins：
7/7 Sequentially Allows Withdrawals of More Competitive Coins：
This includes UMB, XYO, RAZOR, HOLO, ELON, ARV, and others.
7/8 Letter from the Founder to Users：
In an announcement, Huobi founder Rexy Wang stated that the platform has been affected by the bear market and systemic risks caused by institutions like LUNA and 3AC, emphasizing that user rights will still be actively protected.
7/12 Temporary Suspension and Delisting of Yield Products：
The platform delisted financial and lending products of all currencies and closed all related businesses.
Internal Strife
Huobi founder Rexy Wang accused employees on 7/15 of deleting platform systems without authorization, causing the inability to access the Huobi domain.
The latter responded:
As requested by the criminal investigation, all chat records of the Huobi office system have been preserved. Rexy himself has transferred most of his assets out of the platform, and employees' salaries and user withdrawals are also restricted. Many people are currently pursuing legal actions. The Hoo domain and office system are in no way related, so please do not falsely accuse or frame others.
Introduction of Debt Coin Scheme
According to the announcement:
HUSDT
User platform assets will be converted into an equivalent amount of debt coins, for example: 1 USDT = 1 HUSDT Hoo USDT. Debt coins are only available for trading in the Innovation Zone, and users can also convert them to IUSD through the flash exchange feature to participate in partner investment plans.
Note: The announcement is ambiguous, and it is uncertain whether assets will be converted to HUSDT based on their value. If the "based on quantity" mentioned in the official announcement is followed, user assets will be converted into HBTC, HLTC, etc., both of which will definitely have a significant discount.
IUSD
1 IUSD = 1 USD, serving as the valuation unit for partner investments. Users holding IUSD can participate in coin earning. After assets are locked in, the daily unlocking ratio of 0.01% of the invested amount will be adjusted based on actual conditions starting from the next day.
The unlocked coin is the platform coin HOO, and Huobi promises an additional 200% return. However, based on the aforementioned basic unlocking ratio calculation, this means that participating users may need over 27 years to recover their initial investment.
Schedule:
- 8/3: Debt coin conversion scheme goes live
- 8/5: "Debt Coin/USDT" trading opens (Innovation Zone trading)
- 8/8: Debt coin exchange feature goes live
- 8/15: IUSD coin earning feature goes live
Currently, besides the competitive coins gradually allowed for withdrawals as mentioned in the announcement, once user assets are available as debt coins, Huobi will automatically convert them into "HUSDT." To withdraw, users will need to exchange them for the aforementioned competitive coins in the Innovation Zone.
As of the deadline, the latest update from the Huobi exchange on Twitter was on 7/8, and founder Rexy Wang has blocked his personal page on Twitter, limiting it to a few followers only.