blockworks.co
Crypto exchange Hotbit is winding down its primary platform in response to a series of crises.
Hotbit cited the aftermath of a criminal investigation opened last August for its decision to shutter. Hotbit had suspended deposits, withdrawals and live trade for several weeks after authorities froze its operational funds.
“For five years and years months, the Hotbit team has been proud to participate in a wonderful crypto show with 5 million users. However, it is with great regret that we have made the decision to stop all CEX operations from [May 22, 2023],” Hotbit said in a notice posted to its website.
The exchange’s previous trading halt followed allegations of misconduct by a former manager. The specific violations were not disclosed, but the company said the implicated staff had left months earlier.
Prior to this, senior managers at Hotbit were subpoenaed last July and reportedly cooperated with the ongoing investigation. Hotbit did not disclose the identity of the jurisdictional agency responsible for probing the actions of its managers.
The firm said its cash flow only worsened after the investigation. In a blog on Monday, Hotbit cited effects from FTX’s collapse a few months later, as well as bank crises resulting in USDC’s brief depegging earlier this year. An uptick in outflows from centralized exchanges followed, Hotbit noted.
Hotbit suggested that running centralized exchanges could become more difficult in the future as global regulations tighten.
“The Hotbit team believes that centralized exchanges are becoming increasingly cumbersome, with highly complex and interconnected businesses that are difficult to comply with, whether for compliance or decentralization, and are unlikely to meet long-term trends,” it said.
Hotbit said it faced other issues, including frequent cyber attacks and the exploitation of project vulnerabilities by malicious users, leading to substantial losses. As a result, the team found supporting trade in diverse crypto assets unsustainable for risk management.
Hotbit says it is registered in both Estonia and Hong Kong but operates from Shanghai and Taipai. The platform processed about $109 million in crypto trade over the past 24 hours, per CoinGecko. Hotbit didn’t return Blockworks’ request for comment by press time.
Hotbit requested users withdraw their assets before June 21.
“That’s all, with so many joys and tears, our show is over. We want to say thank you and take a bow now. We still believe a bright future about crypto innovation and some of us will still fight for it,” Hotbit said.