Shanghai-based cryptocurrency exchange – Hotbit – announced its decision to stop all its operations starting May 22.
The team behind the platform believes centralized exchanges are “becoming increasingly cumbersome.” It further added that the highly complex and interconnected businesses are difficult to comply with, whether for compliance or decentralization and are “unlikely to meet long-term trends.”
- The crypto exchange explained that successive collapses of large centralized institutions have led the industry to either embrace the regulation or become more decentralized. This change in trend in the crypto industry is an important factor that has prompted it to shut shops.
- In the blog post, Hotbit notified its users to withdraw their remaining assets before June 21st this year and cited that its decision is based on other reasons as well.
- The platform also blamed the deterioration of the operating conditions as a result of a series of crises that followed, including the collapse of FTX and bank crises causing USDC off-peg incidents.
- The events led to continuous outflows of funds from CEX users, including Hotbit.
- The announcement comes almost a year after the platform halted its trading, withdrawal, and deposits as law-enforcement authorities froze some of its assets in connection to the alleged criminal misconduct of a former employee.
- Hotbit suffered repeated cyber attacks and the exploitation of project defects by malicious users that fetched significant losses. Due to this, the team said its current operating model of supporting a diverse range of assets is unsustainable from a risk management standpoint.