Hotbit, a cryptocurrency exchange that was founded in 2017, has announced that it will be shutting down its primary platform on May 22, 2023.
The exchange cited a number of factors for its decision, including a criminal investigation that was opened last August, as well as the collapse of FTX and the brief depegging of USDC.
The criminal investigation into Hotbit was launched after allegations of misconduct by a former manager. The specific violations were not disclosed, but the company said the implicated staff had left months earlier. Senior managers at Hotbit were also subpoenaed last July and reportedly cooperated with the ongoing investigation. The identity of the jurisdictional agency responsible for probing the actions of Hotbit’s managers was not disclosed.
Hotbit said that its cash flow only worsened after the investigation. In a blog post on Monday, the exchange cited effects from FTX’s collapse a few months later, as well as bank crises resulting in USDC’s brief depegging earlier this year. An uptick in outflows from centralized exchanges followed, Hotbit noted.
Hotbit also suggested that running centralized exchanges could become more difficult in the future as global regulations tighten. “The Hotbit team believes that centralized exchanges 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 exchange said.
In addition to the criminal investigation and the broader regulatory environment, Hotbit also said that it faced other issues, including frequent cyber attacks and the exploitation of project vulnerabilities by malicious users. As a result, the team found supporting trade in diverse crypto assets unsustainable for risk management.
Hotbit is registered in both Estonia and Hong Kong but operates from Shanghai and Taipei. The platform processed about $109 million in crypto trade over the past 24 hours, per CoinGecko. Hotbit did not return Blockworks’ request for comment by press time.
Hotbit requested users withdraw their assets before June 21. “That’s all, with so many joys and tears, our show is over,” the exchange said. “We want to say thank you and take a bow now. We still believe a bright future about crypto innovation and some of us will still fight for it.”