New Huo Technology, a Hong Kong-listed digital asset services provider controlled by Chinese crypto tycoon Leon Li, said on Monday that it failed to withdraw $18.1 million worth of cryptocurrencies, mostly customer assets, deposited on the collapsed crypto exchange FTX.
New Huo Technology said the cryptocurrencies trapped include roughly $13.2 million in client assets based on their trading request, and approximately $4.9 million in assets of a subsidiary.
Formerly known as Huobi Technology, New Huo Technology is controlled by Li, who owns about 53% of the company, according to a Monday statement. Li is best known for founding Huobi Group, the operator of one of the world’s largest crypto exchanges, in 2013. He sold his entire stake in Huobi Group to Hong Kong-based About Capital Management in October. Huobi Group wrote on Twitter that New Huo Technology are “independent entities,” adding that Huobi Group’s operations are “normal.”
Li, now the chairman of New Huo Technology, has agreed to provide an unsecured facility of up to $14 million “for the purpose of covering client asset liability” if necessary, according to the statement.
“Since its operation, New Huo Tech has always adhered to the concept of compliance priority and clients first,” said the company’s spokesperson in an email. “This time, the company’s major shareholders and management have reached this financing plan, hoping to take corporate responsibility and ensure the safety of clients’ assets.”
New Huo Technology said the withdrawal failure does not affect its business operations, but expected its financial performance to be “materially and adversely affected” if the incident is not resolved. The company’s shares on the Hong Kong stock exchange plunged almost 15% during the morning trading session on Monday.
FTX, the once high-flying crypto exchange that at one point had a valuation of $32 billion, filed for U.S. bankruptcy protection on Friday. The Bahamas-based company had failed to raise billions to save itself as it was hit by a bank run amid concerns over its poor financial conditions. The collapse has turfed founder Sam Bankman-Fried off the billionaire rank and left big-name investors including Sequoia Capital and Temasek with losses.
New Huo Technology said it will engage legal advisers to make inquiries with FTX and will continue to liaise with FTX to extract the crypto assets as soon as possible.
Established in 2018, New Huo Technology provides digital asset brokerage, management and custody services for institutional investors. The Hong Kong-headquartered firm’s shareholders include Neil Shen, the billionaire founder of Sequoia China.