Crypto exchange Hotbit shuts down following criminal investigation
- Crypto exchange Hotbit has shut down its trading platform nine months after facing a criminal investigation.
- The exchange blamed changing trends in the crypto industry for its decision.
On 22 May, Shanghai-based crypto exchange Hotbit announced that it would wind down its operations, five years after launch. The news comes nine months after several of its employees were subpoenaed in July 2022 in relation to a criminal investigation.
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According to a blog post from Hotbit, last year’s criminal investigation was one factor that led to the decision. The investigation led to the suspension of operations for several weeks starting August 2022 and deteriorated the exchange’s operating conditions.
This was followed by a string of collapses and bankruptcies in the crypto industry, including that of FTX, which resulted in outflows of funds from Hotbit. As a result, Hotbit’s cash flow became stunted, causing further losses.
Hotbit also attributed its decision to shut down to changing trends in the crypto industry. According to the CEX, bankruptcies and scandals, which rocked exchanges globally, presented two paths to Hotbit. They either had to embrace regulation or become more decentralized.
In a blog post, the exchange explained its decision by saying:
“The Hotbit team believes that centralized exchanges (CEX) are becoming increasingly cumbersome, with highly complex and interconnected businesses that are difficult to comply with, whether for compliance or decentralization, and are unlikely to meet long-term trends.”
The crypto exchange also blamed repeated cyber-attacks and the bad actors in the crypto space. These actors exploited defects in decentralized finance projects, resulting in significant losses for CEXes. From a risk management standpoint, Hotbit concluded that it was not feasible to conduct business while supporting a diverse range of assets.
The crypto exchange’s users have until June 22, 2023, to withdraw their crypto assets and funds from the trading platform.