Huobi sues… Huobi? 3AC rises from ashes, Korea crypto contagion: Asia Express

Huobi co-founder sues own company for copyright infringement

According to local news reports on June 21, Leon Lin Li, former co-founder of cryptocurrency exchange Huobi Global, has filed a copyright infringement lawsuit against the company in Hong Kong. Li claims that despite selling his majority stake to an entity controlled by Chinese blockchain personality Justin Sun last November, his company, X-Spo, still possesses trademark rights associated with the term “Huobi Global,” and that “Huobi Global,” the actual exchange, has been using the trademark without authorization. 

Though it’s not immediately clear why Li seeks litigation against the very company and brand he previously built, a series of heated exchanges between Li and Justin Sun last month may offer some hints.

On May 16, Sun published a series of allegations against Wei Li, Lin Li’s brother. In the Twitter post, Sun accused Wei Li of “receiving millions of Huobi (HT) tokens through “abnormal means” at zero cost and of “consistently selling off these HT tokens and cashing out.” To which Lin Li replied: “I hope Huobi can provide evidence. If it is confirmed that it is zero-cost HT was obtained through illegal means, I will personally pay 10 times the HT [amount] to Huobi company.”

Hodlnaut’s last voyage? 

According to a recent court filing, the fate of whether troubled Singaporean crypto lending firm Hodlnaut is to be dissolved or restructured will be sealed on August 7. Last August, Hodlnaut halted operations after disclosing that it lost over $300 million of its client’s assets from the implosion of the $40 billion Terra Luna ecosystem in May 2022. 

The firm faces approximately $300 million in claims from creditors, who mostly wish to see the firm dissolved. That said, both co-founders Juntao Zhu and Simon Lee want to continue Hodlnaut’s operations, even though the company had reportedly lost 69% of users’ deposits. Last November, Singaporean police began a probe into Hodlnaut’s activities as the firm initially denied exposure to the Terra Luna ecosystem. 

South Korean crypto lending contagion

On June 22, South Korean crypto lending firm Haru Invest announced that it would be terminating a portion or all of its current staff count just days after suspending users’ deposits and withdrawals. The move comes after the firm accused its consignment operator, B&S Holdings, of fraudulent operations. 

“It comes with a heavy heart to inform you that we will be minimizing the operations of Haru Invest and its affiliated companies to prevent further damages that are likely to be incurred.”

Last week, fellow South Korean crypto lending firm Delio, with over $9 billion in self-reported assets under management, also announced it would suspend withdrawals, citing exposure to Haru Invest. The firm has since clarified it will resume withdrawals, albeit with no schedule disclosed. During an extraordinary investors’ meeting on June 17, CEO Jung Sang-ho disclosed for the first time that Haru Invest is claiming bankruptcy.

In addition, Haru also claims that it has filed a criminal complaint against B&S Holdings as well as civil litigation. But it appears that Haru itself does not know exactly what is happening. In a letter to investors on June 20, CEO Hugo Lee wrote:

“We’ve been explaining about the current situation and progress through the company statement three times so far, but we understand that it’s still far from enough. We are sorry about this as well.”

3AC co-founders stage unlikely comeback

While some firms’ (and individuals’) reputations may be devastated by bankruptcy, it can be a simple nothingburger for others. On June 21, Kyle Davies, co-founder of bankrupt Singaporean hedge fund Three Arrows Capital (3AC), wrote in a tweet:

“3AC is dead, long live 3AC Ventures.”

The same day, OPNX, a platform for trading claims against bankrupt crypto entities founded by Davies and fellow 3AC co-founder Su Zhu, said that 3AC Ventures had become the firm’s “new ecosystem partner.” Interestingly, given that the use of leverage by Zhu and Davies played a pivotal role in 3AC’s $3.4 billion downfall last year, 3AC Venture’s website states:

“3AC Ventures is focused on superior risk-adjusted returns without leverage.”

On June 24, 3AC Ventures introduced its first investment, an inaugural project dubbed “Raiser,” that allows users to borrow funds based on their on-chain creditworthiness. “Borrowers raise funds by issuing zero-coupon bonds. Lenders buy these bonds to earn a fixed income. Traders can trade these bonds in the secondary market,” the developers wrote in an introductory thread.

Almost one year later, 3AC is still undergoing bankruptcy proceedings, but it appears that clawing money back has become harder than ever. On June 15, 3AC creditors filed a motion to hold Kyle Davies in contempt of court; however, the motion would only apply to Davies, and not Su, as the latter’s Singaporean citizenship does not subject him to U.S. jurisdiction. The two’s current whereabouts are unknown, and no criminal complaints have been yet filed against the two blockchain personalities. 

OPNX: Aspiring blockchain underdog

On April 5, Su Zhu and Kyle Davies’ crypto derivatives claims exchange OPNX, which is based in Hong Kong, saw a meager $13.64 volume traded on its first day of debut. By late-June, that number had (apparently) risen to $34.1 million. Following the traction was a near 200% rise in the price of OPNX’s native OX tokens to $0.03 in the past month, pushing its fully diluted market cap to nearly $300 million.Heck, the firm even has its own stablecoin now.

Let’s face it, nobody, perhaps not even Davies or Zhu themselves, expected OPNX to succeed from the get go. But successful underdogs often have a deep grudge against those who “punched down” the hardest while they were out on their luck. Which may be why on June 22, OPNX filed a defamation lawsuit against venture capitalist Mike Dudas, alleging the publication of defamatory comments against the exchange from February to March 2023.

Around the same time, the exchange unveiled its new “Justice Tokens,” (JT), citing “one of the biggest challenges the industry faces is the current prevalence of defamation,” Based on its tokenomics, one JT will exist for each defamation case, it will be an ERC20 token with a maximum supply of 1 billion. Three quarters will be distributed to OX stakers, 20% will be given to JT-OX liquidity providers, and 5% will be airdropped to Milady nonfungible tokens holders. At the time of publication, it’s unclear if Davies plans to issue tokens to build rapport against review bombers of his Dubai restaurant during possible litigation proceedings.

“The resulting defamation and harassment greatly deters entrepreneurs and innovators. The presence of these people is a clear net good to the industry.”