Hotbit, a platform for buying and selling cryptocurrencies, has announced that it will halt all operations starting May 22, 2023. The exchange has urged all its customers to withdraw their digital assets before June 21, 04:00 UTC.
Hotbit’s decline has been linked to various incidents in the cryptocurrency industry. For instance, the collapse of FTX and banking crises that resulted in the USDC depegging event have caused a steady outflow of funds from centralized exchanges, leading to a decline in Hotbit’s cash flow. Moreover, Hotbit has cited repeated cyber attacks and regulatory pressure as contributing factors to its financial struggles.
Hotbit Facing Challenges
In August 2022, Hotbit experienced operational challenges that led to a temporary suspension of its services. The suspension was prompted by an investigation into a former staff member, resulting in a steady outflow of funds and a subsequent decline in the company’s cash flow.
As part of the criminal inquiry into the ex-employee, law enforcement authorities froze some of Hotbit’s funds, further hindering its ability to function efficiently. Hotbit has issued a statement regarding its present condition, attributing a drop in its operational status to an investigation involving one of its former team members in August 2022.
The inquiry prompted the exchange to suspend its activities for several weeks. In response, Hotbit conveyed its view that running centralized exchanges are becoming difficult, and they might not be able to cater to the crypto trends in the near future. The exchange als underscored two potential alternatives: to become more decentralized or to embrace regulatory measures.
Reaction of its Users
The sudden closure of Hotbit exchange has resulted in a sense of disappointment and frustration among its users. Several users have faced challenges in withdrawing their funds, leading to fears that their assets may be lost forever. While a few users are hopeful and waiting for more information from Hotbit, the absence of any communication has left their funds in an uncertain state.
Hotbit has received some heat in the past for not providing margin support and for terminating trades without user consent. Some users have accused Hotbit of fraud and misappropriation of client funds. However, it is unclear whether these issues are related to the current suspension of the exchange.