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Hong Kong-based CEX (centralized crypto exchange) with more than five million customers Hotbit has announced that "it is time to take a bow." The platform is winding down its operations and giving its users a month to withdraw the rest of their funds from it.
In a tweet published three hours ago, the team of the exchange explained what is happening, sharing the reasons that prompted them to take that hard step and leave the cryptocurrency market. Overall, the exchange is ending its presence in the market after working for slightly more than five years.
Operations will discontinue today, May 22, at 04:00 UTC.
Five-million-user Hong Kong CEX shutting down
According to the tweet, users have some time, until June 21 (a month from now), to move their funds away from Hotbit. The team of the platform has cited three major reasons for shutting down their operations.
The first one is worsening operating conditions overall. The team was made to halt the work of Hotbit in August of last year because of the investigation. Back then, a former Hotbit staffer had begun their own project and was assumed to have violated criminal law.
Due to that investigation, several top Hotbit managers were subpoenaed, and a portion of the funds on the exchange was frozen.
After that, the crypto space went through several crises, including the collapse of the FTX crypto trading behemoth after its trading company, Alameda Research, went bankrupt, as well as the USDC de-pegging and legal issues of Binance. All of that caused a big outflow of clients from centralized crypto exchanges, which included Hotbit.
Just In: Hotbit, an exchange with 5 million users, announced the suspension of operations today, and users need to withdraw their remaining assets before June 21; the core reason is the deterioration of the operating conditions, Hotbit management team was forced to suspend…
— Wu Blockchain (@WuBlockchain) May 22, 2023
Hotbit faces multiple problems
The second reason cited by the management team was "change in the industry trend." The tweet stressed the dilemma faced by the crypto space after the crash of FTX — either to embrace regulatory rules or go more decentralized.
Therefore, the Hotbit team reckons that centralized exchanges are becoming largely "cumbersome" since they constitute a "highly complex of interconnected businesses that are difficult to comply with." The conclusion here is that, according to the Hotbit exchange, CEXes will hardly be able to meet long-term trends that the crypto industry may embrace in the future.
The team thanked all of its users and said they believe in the bright future of the cryptocurrency industry anyway.
Bittrex U.S. shuts down for similar reasons
It is worth noting here that, for similar reasons, major U.S. exchange Bittrex also shut down its operations earlier this year. The team is now focused on helping Bittrex Global to succeed.
Coinbase has also set up a branch that works outside of the U.S. and does not allow citizens of this country to access the products of its new platform — Coinbase International Exchange.