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Cryptocurrency exchange, Hotbit has announced the difficult decision to halt all centralized exchange (CEX) operations after a successful run of 5 years and 4 months.
With a user base of 5 million, Hotbit has been an active participant in the crypto market. However, as of May 22, 4:00 UTC, the exchange ceased its CEX activities, urging all users to withdraw their remaining assets by June 21, 4:00 UTC.
This decision is rooted in three key factors. Firstly, the operating conditions for Hotbit have significantly deteriorated. Following an investigation that forced the Hotbit management team to suspend operations for several weeks in August 2022, the industry witnessed a series of crises, including the collapse of FTX and bank-related incidents causing USDC off-peg occurrences. These events resulted in the outflow of funds from CEX users, including Hotbit, and a subsequent decline in cash flow.
Secondly, the crypto industry has witnessed a shift in trends. The successive failures of large centralized institutions have led the industry to favor either regulatory compliance or decentralization. The Hotbit team believes that CEXs are becoming increasingly burdened with complex and interconnected businesses that pose challenges for both compliance and decentralization efforts. As a result, they are unlikely to align with long-term industry trends.
Hotbit has been recognized for its extensive offering of assets and value-added services since its inception. The exchange was the first to list various emerging assets, such as SHIB, KSM, and GRIN, and pioneered staking services starting with ATOM. Additionally, Hotbit introduced the concept of Defi mining using Compound. However, these opportunities also come with inherent risks. Hotbit has encountered numerous issues, including cyber-attacks and the exploitation of project vulnerabilities by malicious users, resulting in significant losses. Therefore, the Hotbit team deems the operational model of supporting a diverse range of assets unsustainable from a risk management perspective.
Hotbit expresses its gratitude to its users for their support and participation in the crypto journey, and remains hopeful that the transition will pave the way for future endeavors that will continue to serve the crypto community with passion, resilience, and innovation.