- Huobi founder Li Lin is suing the exchange, a move that threatens its expansion in Hong Kong.
- The lawsuit alleges that the exchange used the “Huobi” trademark without consent from X-Spot, Li Lin’s company.
- The firm has been rumored to be in a crisis since the start of the year.
- Huobi token is up 3%, joining altcoins in enjoying Bitcoin rally overflows.
Huobi Global Limited is the subject of a class action lawsuit by founder Li Lin on allegations of trademark infringement. The news comes as the exchange tries to expand its services in Hong Kong amid mounting regulator pressure in the cryptocurrency industry. As the US Securities and Exchange Commission (SEC) clamps down on cryptocurrencies and related platforms, exchanges feel compelled to look for greener pastures to continue their trade.
Huobi founder sues the exchange he founded
Huobi founder Li Lin is suing the exchange in the High Court of the Hong Kong Special Administrative Region. Based on the report, Lin is pursuing charges of trademark infringement and is suing through another company he controls, X-Spot Ltd.
The move comes after Huobi Global Advisor Justin Sun blocked Li Wei’s account, accusing him of dumping Huobi Token, HT. Notably, Wei is Li Lin’s younger brother. At the time, Justin Sun addressed the issue and assured HT holders that the volume of Huobi Token sold by Wei would be destroyed from supply to restore the exchange token’s value. The move had caused the token to display massive price swings, as FXStreet reported.
Nevertheless, following Sun’s move to block Wei’s account, Huobi resumed using the “Huobi” trademark.
Fast-forward to the June 21, 2023 complaint, Li Lin claims, “X-Spot Limited has retained exclusive rights to the ‘Huobi’ trademark, which Huobi Global Limited has been using without X-Spot’s authorization.”
Reportedly, the original shareholders explicitly agreed to retain the exclusive “Huobi” trademark rights when they transferred their shares in Huobi Global to About Capital Management (HK) Co. on October 7, 2022. As part of the terms, the buyout vehicle of About Capital would control the majority stake in Huobi Global upon completion of the transaction. The sale was part of a strategy to position the platform to provide international investors with first-class trading and investment services.
Besides trademark rights retention, the shareholders also agreed that the rights would not be transferred to the buyer or Huobi, adding that the equity transfer and asset delivery agreement between the parties expressly prohibited the buyer from using the “Huobi” trademark and brand.
Huobi Global Limited defends
Huobi Global Limited has, however, defended its position, saying that the exchange has the right to use its trademark in a wide range of legal jurisdictions globally. Based on their interpretation, this gives it the mandate to use it freely.
Although Huobi Global Limited is pursuing expansion in Hong Kong, it is not yet registered. This is noteworthy because of the threat of Li Lin’s lawsuit on the proposed expansion. Based on operational rules in Hong Kong and in many other regions, the right to use a trademark is subject to the laws and regulations of that particular region. The court would therefore have to determine whether to approve Huobi Exchange’s expansion plans.
There has not been any formal notice of admissibility from any court, but FXStreet will bring you updates as they unfold.
Huobi Token price
At the time of writing, Huobi Token (HT) is auctioning for $2.70, a daily rise of 3.8% alongside a 15% increase in 24-hour trading volume, suggesting investor interest in the altcoin. Some may also argue that HT, like other tokens, is enjoying the overflows from the Bitcoin rally after BTC breached $30,000 on June 21.