The Rise and Fall of Huobi BTC (HBTC)

HBTC mirrors BTC's price while offering the flexibility of Ethereum-based assets. This foundational idea was key to the project’s development, establishing HBTC as one of the first and most successful tokens in Huobi’s series of H-tokens.

H-tokens are digital assets created by Huobi Global on the Ethereum blockchain, designed as exact replicas of other cryptocurrencies to enable their use across different blockchains. Essentially, H-tokens act as bridges, connecting various networks and allowing interaction with any digital coin within these ecosystems.

To issue a new H-token, an equivalent amount of the base cryptocurrency (e.g., BTC) is locked in an HTX cold wallet (HTX being Huobi’s rebranded name). Each H-token is fully backed by its underlying asset at a 1:1 ratio. Once issued, H-tokens can interact freely within the Ethereum ecosystem.

H-token holders can use these tokens across various DeFi protocols for trading, staking, lending, and other purposes. These digital assets are highly liquid, making them easily exchangeable for other cryptocurrencies or redeemable for the equivalent amount in their original asset, such as Bitcoin.

The H-token family also includes Huobi Token (HT), HETH (backed by Ethereum), and HBCH (backed by Bitcoin Cash), although none have reached the same level of popularity as HBTC.

In essence, H-tokens are a form of wrapped token designed to enable seamless liquidity transfer across different blockchains.

Huobi BTC (HBTC) was launched in February 2020 as a bridge between centralized (CEX) and decentralized (DEX) platforms, aiming to let Huobi Global users participate in DeFi while retaining control over their BTC assets.

Bitcoins backing HBTC are stored in cold wallets, ensuring their security. According to the developers, all HBTC transactions are transparent and can be verified through any Ethereum blockchain explorer.

HBTC was intended to bring competition to the wrapped token market, allowing investors to diversify risk and access DeFi activities without selling their BTC.

Unfortunately, the H-token project is currently facing challenges, and this promising initiative has hit significant roadblocks.

In 2023, HTX (formerly Huobi) faced major regulatory challenges, leading to its removal from the Seychelles corporate registry of registered cryptocurrency exchanges.

The Seychelles Financial Services Authority (FSA) issued a statement clarifying that Huobi Global Limited had never received any licenses or authorizations from the FSA to conduct activities related to virtual assets. The FSA “strongly urges investors and members of the public to exercise caution in respect to the VA and VASP services offered by Huobi Global Limited where they are held out as being regulated in the Seychelles.”

As a result, HBTC was delisted from major exchanges such as Coinbase, Binance, and Kraken, removing it from these trading platforms.

HTX then faced financial difficulties, beginning with layoffs and expense optimization. Several promising projects, including its Cloud Wallet and NFT platform, were shut down to reduce costs and refocus on core business areas.

However, the crisis deepened when HT, Huobi’s native token, experienced a sharp price drop, triggering panic sales among investors. There were even suspicions that the HT team might have been involved in a pump-and-dump scheme. 

In the midst of this scandal, Justin Sun accused Li Wei, brother of Huobi’s co-founder Li Lin, of illegally acquiring millions of HT tokens during the ICO and dumping them on the open market at a discounted price, profiting at the expense of other holders.Further scrutiny fell on other HTX executives, including Wan Ming (Tron's Head of Product), Rain Ren (Head of Chain Tech), Fai Wang (Head of HR), and Wang Huanye (Head of Server Operations). Their actions reportedly caused substantial harm to HTX and its investors.

These issues have significantly impacted HTX's line of H-tokens. While HTX continues to operate in Asian markets, its wrapped assets have lost their peg to the original cryptocurrencies.

The divergence between HTX’s wrapped Bitcoin (HBTC) and Bitcoin itself is clear: 

Market Metrics for HBTC