Hotbit, a cryptocurrency exchange based in Shanghai, has announced that it will cease all operations on May 22nd, citing the increasing complexity and regulation of centralized exchanges. The platform has urged its users to withdraw their remaining assets before June 21st.
Reasons for Closure
The team behind Hotbit believes that centralized exchanges are becoming increasingly cumbersome and that the highly complex and interconnected businesses are difficult to comply with, whether for compliance or decentralization and are unlikely to meet long-term trends. The crypto exchange explained that successive collapses of large centralized institutions have led the industry to either embrace regulation or become more decentralized. This change in trend in the crypto industry is an important factor that has prompted Hotbit to shut down.
Hotbit also blamed the deterioration of the operating conditions as a result of a series of crises that followed, including the collapse of FTX and bank crises causing USDC off-peg incidents. The events led to continuous outflows of funds from CEX users, including Hotbit. Due to this, the team said its current operating model of supporting a diverse range of assets is unsustainable from a risk management standpoint.
Past Issues
The announcement comes almost a year after the platform halted its trading, withdrawal, and deposits as law-enforcement authorities froze some of its assets in connection to the alleged criminal misconduct of a former employee. Hotbit suffered repeated cyber attacks and the exploitation of project defects by malicious users that fetched significant losses.
Hotbit’s decision to cease operations is due to the increasing complexity and regulation of centralized exchanges and the deterioration of operating conditions. The platform has urged its users to withdraw their remaining assets before June 21st. The events that led to the decision include the collapse of FTX and bank crises causing USDC off-peg incidents, which led to continuous outflows of funds from CEX users, including Hotbit. As the crypto industry trends towards either embracing regulation or becoming more decentralized, Hotbit’s team believes that its current operating model of supporting a diverse range of assets is unsustainable from a risk management standpoint.