Hotbit, one of the most popular cryptocurrency trading platforms and companies, announced that it would suspend all its operations on May 22 at 04:00 UTC, due to the challenges and compliance issues facing the industry. The company, which has a user base of five million cryptocurrency enthusiasts, asked its clients to withdraw their remaining assets by June 21 at 04:00 UTC.
Why is Hotbit closing its operations?
In a statement on May 22, the company explained that centralized exchanges had suffered a continuous outflow of funds following the various crises that have affected the cryptocurrency industry. Hotbit cited its August 2022 investigations, along with the FTX crash and USD Coin (USDC) decoupling as major catalysts for its deteriorating operating conditions.
Furthermore, the China-based exchange noted that the subsequent collapse of large centralized institutions had turned the tide in the cryptocurrency industry. According to the exchange, centralized entities are forced to either adopt the regulation or become more decentralized.
Hotbit said that these incidents resulted in a continuous outflow of funds from centralized exchanges, which are becoming “increasingly cumbersome” and “unlikely to meet long-term trends”. Hotbit also blamed the repeated cyberattacks and the exploitation of “project defects by malicious users” as reasons for its downfall.
Hotbit wrote:
“We believe that the current centralized exchange (CEX) model is becoming more difficult and complex, and presents enormous challenges for regulatory compliance. This model does not adapt to long-term trends.”
Asset diversity: a double-edged sword
Hotbit It has been at the forefront of the listing of many emerging assets, such as SHIB, KSM, GRIN, and others. Hotbit pioneered staking services from ATOM and was the first to conduct Defi mining business using Compound.
However, the company now sees this wide range of assets as a potential liability. The unpredictable nature of the industry means that many opportunities are also fraught with risk. Hotbit has had its share of setbacks, including cyberattacks and malicious users exploiting flaws in the project, causing substantial losses.
Now it has decided to conclude its activity with elegance.
