Crypto Exchange Huobi’s Backdoor Listing Faces An Uncertain Future

Huobi, a Chinese owned and Singapore-based leading cryptocurrency exchange, has to face uncertainty over its acquisition of a Hong Kong-listed company via reverse takeover as the broker involved in the backdoor listing has been invested by Hong Kong’s financial regulators, Chinese business magazine Caijing reported on Sunday.

As 8btc previously reported, Huobi is seeking to become the largest shareholder of Hong Kong Stock Exchange(HKEx)-listed Pantronics, an electronic products manufacturing firm. According to the shareholding disclosures filed by Pantronics in late August, the public firm would transfer 221,781,668 of its shares to Li Lin, founder and CEO of Huobi Group. The filing said that the stock is worth HK$2.7 per share, which means this deal could hit nearly $77 million. The deal, if approved, will open the door for Huobi to go public via a reverse takeover.

The filing also indicated that the Hong Kong-based broker dealer, Kingston Securities Ltd.,  serves as the entrusting party and financial adviser for this acquisition deal.

According to the the special administrative region’s government gazette dated on September 28, the Hong Kong Securities and Futures Commission (SFC) froze 10.1 billion yuan from a client’s accounts in 3 brokers suspected of an insider trading scheme . Kingston Securities is one of the 3 involved brokers. The investigation is still underway.

If Kingston Securities Ltd. was confirmed to be involved in the scheme, its broker license would possibly be suspended by the SFC. The result will seriously hinder Huobi’s acquisition process.At present, Huobi refuses to comment on any issue about this acquisition.

Huobi’s backdoor listing move comes at a time when several cryptocurrency-focused Chinese private company are applying for IPOs in Hong Kong, including bitcoin mining hardware manufacturers Canaan Creative and Ebang. And Bitmain, the world’s largest cryptocurrency mining company, has officially field an IPO on the HKEx on September 26.

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