coinspress.com
Hotbit, a cryptocurrency exchange, has announced the closure of its primary platform due to a series of crises.
The decision to shut down comes as a result of the aftermath of a criminal investigation initiated in August of last year. During the investigation, Hotbit had to suspend deposits, withdrawals, and live trading after its operational funds were frozen by the authorities.
In a notice posted on its website, Hotbit expressed regret over its decision to cease all operations related to centralized exchanges from May 22, 2023. The exchange had previously halted trading following allegations of misconduct by a former manager. Although the specific violations were not disclosed, Hotbit confirmed that the implicated staff had left the company months prior to the investigation.
Last July, senior managers at Hotbit were issued subpoenas and reportedly cooperated with the ongoing investigation. However, the exchange did not disclose the identity of the jurisdictional agency responsible for probing the actions of its managers.
Hotbit mentioned that its financial situation deteriorated further after the investigation. In a recent blog post, the exchange attributed the worsening cash flow to the collapse of FTX a few months later and the brief de-pegging of USDC resulting from bank crises earlier this year. These events led to increased outflows from centralized exchanges, according to Hotbit.
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The exchange also highlighted the increasing difficulties of operating centralized exchanges due to tightening global regulations. Hotbit expressed the belief that such exchanges have become cumbersome, with complex and interconnected businesses that are challenging to comply with. It stated that these exchanges are unlikely to align with long-term trends, whether for compliance or decentralization.
Hotbit faced additional challenges, including frequent cyber attacks and the exploitation of vulnerabilities in crypto projects by malicious users, which resulted in significant losses. As a result, the team deemed it unsustainable to support trading in diverse crypto assets for risk management purposes.
Hotbit is registered in Estonia and Hong Kong but operates from Shanghai and Taipei. The platform processed approximately $109 million in cryptocurrency trades over the past 24 hours. At the time of writing, Hotbit had not responded to Blockworks’ request for comment.
Hotbit has urged its users to withdraw their assets before June 21. In a concluding statement, Hotbit expressed gratitude to its users and emphasized its belief in the bright future of crypto innovation, with some team members continuing to advocate for it.