Huobi founder Li Lin sued Huobi Global in Hong Kong for using the Huobi trademark without proper permission. Lin filed a lawsuit in the High Court of the Hong Kong Special Administrative Region.
According to the lawsuit, the exchange continued to use the Huobi brand without obtaining consent from Li Lin’s company, X-Spot.
Huobi Founder Sues Exchange He Founded
The Chinese crypto journalist posted details of the lawsuit on his Twitter account, stating that the crypto firm had resumed using the “Huobi” trademark without X-Spot’s permission. Lin’s company retains exclusive rights to the trademark. News of the lawsuit comes as the exchange attempts to expand its footprint in Hong Kong amid growing regulatory pressure on the crypto industry. The United States Securities and Exchange Commission has also cracked down on cryptocurrencies and crypto platforms, forcing exchanges to seek friendlier jurisdictions.
Colin Wua Chinese crypto journalist, posted details of the lawsuit on Twitter, stating,
“Huobi founder Li Lin formally sued Huobi Global in Hong Kong for using its Chinese trademark 火币 which was not allowed to continue to be used in the initial acquisition agreement. Huobi was acquired by Justin Sun for over $1 billion last year. Sun froze Li Lin’s brother’s account and accused him of dropping HT this year.
Li versus Sun
The decision to go ahead with the swap comes after Justin Sun, Global Huobi Advisor, decided to block the account of Li Lin’s brother, Li Wei, and accused him of dumping Huobi Global’s native HT token. Sun then assured tokenholders that the volume of HT tokens sold by Wei would be removed from circulating supply, restoring the token’s original value. This move resulted in significant volatility for the token. Following the account blocking, Huobi resumed using the “Huobi” brand.
However, the complaint filed by Li Lin on June 21, 2023 indicates that X-Spot had retained the exclusive rights to the Huobi brand.
“X-Spot Limited retained the exclusive rights to the “Huobi” trademark, which Huobi Global Limited used without X-Spot’s permission.”‘
Apparently, when the original shareholders transferred their shares in Huobi Global to About Capital Management, they explicitly agreed to retain the “Huobi” brand. Under the terms of the agreement, About Capital’s buyout vehicle would control a majority stake in Global Huobi once the transaction is complete. The sale of the exchange was part of a larger strategy to position the platform as an option to provide international investors with the best investing and trading services.
Besides maintaining the trademark rights, the shareholders also agreed that the rights would not be transferred to Huobi or the buyer. They added that the parties’ asset delivery and capital transfer agreement prohibits the buyer from using the “Huobi” brand and trademark.
Huobi Global Counters
However, Huobi Global refuted the claims, arguing that the exchange retains the right to use the mark in a number of legal jurisdictions around the world. According to the exchange’s interpretation of the agreement, it has a mandate to freely use the “Huobi” trademark. Huobi Global Limited is currently looking to expand its business in Hong Kong. However, the exchange is not yet registered in the region. This is important because of the threat posed to the expansion plans proposed by Li Lin’s lawsuit.
According to operational rules in Hong Kong and other regions, the right to use a trademark is subject to the regulations and laws of the region. As a result, a court will have to approve Huobi’s expansion plans. Meanwhile, the Huobi token is currently trading at $2.69, suggesting heightened investor interest in the token despite ongoing issues. So far, Justin Sun or Huobi Global have made no official comment on the lawsuit.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.