The Rise and Fall of Huobi BTC (HBTC)
HBTC is an Ethereum-based token backed 1:1 by Bitcoin. In this article, we explore the mechanics of H-token technology, its benefits for investors, and why Huobi BTC is currently going through challenging times.
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Huobi BTC (HBTC) is an ERC-20 token issued by the Chinese platform Huobi Global, designed as a Bitcoin equivalent on the Ethereum blockchain.
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.
What Are 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.
How Do H-Tokens Work?
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.
Related: What Are Wrapped Tokens and Why Do You Need Them?
History and Key Features of Huobi BTC
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.
Interesting Fact: Huobi’s rebranding to HTX was announced in 2023 at the TOKEN-2049 conference in Singapore. The new name highlights a close connection to the TRON ecosystem: “H” for Huobi, “T” for TRON, and “X” for exchange. The slogan was also updated to “HTX: Just Trade It.”
Related: What is Huobi (HT)? Project Overview
HBTC, launched on Huobi Global, is an Ethereum-based BTC-backed token. Source: Medium
To obtain HBTC, users deposit Bitcoin into their HTX exchange account and select “Convert to HBTC” from the options.
For transfers, users can choose “Withdraw HBTC,” enter the recipient’s wallet address, and specify the withdrawal amount.
When HBTC is redeemed, the locked Bitcoin is released and becomes available for other transactions on the platform.
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.
HBTC Depeg from BTC
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.
You might also like: Justin Sun: Express from Ripple to Huobi
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:
A pegged token is expected to maintain parity with its base asset. Unfortunately, HBTC failed to do so. Source: CoinMarketCap
Market Metrics for HBTC
At the time of writing, the Huobi BTC token has the following metrics:
- Current price: $37,434
- All-time high: $68,764
- All-time low: $11,000
- Market capitalization has fallen to $36.3 million
- HBTC is traded primarily on smaller platforms such as MakiSwap and MDEX
- Daily trading volume currently does not exceed $100,000
- Circulating supply: 969.49 HBTC
Despite this, Justin Sun remains optimistic about reviving the project and has even established a $100 million fund to bolster HTX’s liquidity.
However, given that HTX-Huobi assets are integrated into numerous protocols connected to Justin Sun, there are doubts as to whether HBTC will be the primary focus.
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