Hotbit Closes Operations as Centralized Exchanges ‘Becoming Increasingly Cumbersome’

The Shanghai-based cryptocurrency exchange – Hotbit – announced its decision to stop all its operations starting May 22.

The team behind the platform believes that centralized exchanges “become more difficult.” It added that highly complex and interconnected businesses are difficult to follow, either for compliance or decentralization and “are unlikely to meet long-term trends.”

• Crypto exchanges explain that the successive collapse of large centralized institutions has led the industry to accept regulation or become more decentralized. This changing trend in the crypto industry is a key factor that has prompted it to close up shop.
• In the blog post, Hotbit informed its users to withdraw their remaining assets before June 21 this year and cited that its decision was also based on other factors.
• The platform also blamed the deterioration of operating conditions as a result of a series of crises that followed, including the FTX collapse and banking crises that led to the off-peg incidents of the USDC.
• The events led to a steady flow of funds from CEX users, including Hotbit.
• The announcement comes nearly a year after the platform halted trading, withdrawals, and deposits while law enforcement authorities froze some of its assets in connection with alleged criminal misconduct by a former employee.
• Hotbit has suffered repeated cyber attacks and the exploitation of flaws in the project by malicious users who have incurred huge losses. Consequently, the team says that its current operating model of supporting a diverse range of assets is unsustainable from a risk management standpoint.