Hotbit, a major crypto exchange boasting 5 million users, has immediately suspended its operations. In a public statement released today, the Hotbit management team cited deteriorating operating conditions as the primary reason behind this unexpected decision.
Users have been urged to withdraw their remaining assets before June 21 as the exchange prepares to cease all centralized exchange (CEX) operations.
This unforeseen turn of events stems from a series of unfortunate circumstances that have plagued Hotbit since August 2022. During that time, the exchange was embroiled in an investigation, leading to the arrest of several managers and the freezing of certain accounts by Chinese law enforcement.
While the specifics of the investigation remain undisclosed, it is believed that the founder of Hotbit was linked to a project under scrutiny, thus casting a shadow over the exchange’s operations.
In a letter addressed to Hotbit users, the team expressed their regret over this difficult decision. They acknowledged their pride in serving as a vital player in the crypto landscape for the past 5 years and 4 months, with a staggering user base of 5 million individuals.
Discontinuing CEX Operations Amid Crypto Challenges
However, the management team recognized the need to discontinue CEX operations due to three fundamental factors. Firstly, the operating conditions have significantly deteriorated. Following the forced suspension of operations in August 2022 due to the investigation, the industry has faced a series of crises.
Notably, the collapse of FTX and banking crises triggering USDC off-peg incidents have caused substantial outflows of funds from various CEX platforms, including Hotbit, consequently impacting cash flow and financial stability.
Secondly, the evolving trend within the crypto industry has played a crucial role in Hotbit’s decision. The continuous collapse of large centralized institutions has pushed the industry towards embracing regulation or decentralization.
The Hotbit team believes centralized exchanges are becoming increasingly cumbersome, with complex and interconnected businesses that are difficult to align with compliance standards and decentralization principles. In light of these challenges, the team deems it unlikely for CEX platforms to meet long-term trends.
Hotbit has been recognized throughout its operation for its wide selection of assets and value-added services. The exchange pioneered listing numerous emerging assets, such as SHIB, KSM, and GRIN and was the first to introduce staking services and Defi mining utilizing Compound.
However, due to the inherent uncertainties in the industry, Hotbit has faced significant hurdles, including repeated cyber attacks and malicious exploitation of project vulnerabilities, resulting in substantial losses.
Consequently, the Hotbit team deems the model of supporting a diverse range of assets unsustainable from a risk management perspective.
As Hotbit bids farewell to its users, the team expresses gratitude and takes a final bow. While this chapter may be closing, they remain optimistic about the future of crypto innovation, with some team members continuing to fight for its advancement.
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