Hotbit shuts down as cyber attacks, crypto crises weaken its operations Hotbit shuts down as cyber attacks, crypto crises weaken its operations
Hotbit said centralized exchanges have to either embrace regulation or become more decentralized to succeed.
2 min read
Updated: May. 22, 2023 at 10:33 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto exchange Hotbit said it would halt all operations on May 22 by 04:00 UTC, advising its users to withdraw their assets before June 21.
Why Hotbit is shuttering operations
In a May 22 statement, Hotbit explained that centralized exchanges had witnessed a continuous outflow of funds following the several crises that hit the crypto industry.
Hotbit cited its investigations in August 2022, alongside FTX’s collapse and USD Coin (USDC) depeg, as significant catalysts for its deteriorating operating conditions.
Besides that, the China-based exchange noted that the subsequent collapse of large centralized institutions had changed the crypto industry trend.
According to the exchange, centralized entities are left embracing regulation or becoming more decentralized. Hotbit wrote:
“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.”
Last year, several centralized crypto entities, like FTX, Celsius, BlockFi, etc., collapsed amid the record market downturn. These events have led to increased regulatory scrutiny of the crypto industry from financial regulators worldwide.
Hotbit added that it was also folding up because it has suffered numerous “cyber attacks and the exploitation of project defects by malicious users.” According to the firm, this has led to significant losses for its operations, saying its “operation model of supporting a diverse range of assets is unsustainable from a risk management standpoint.”
According to its statement, Hotbit operated for five years and four months, serving 5 million users. CoinMarketCap said the platform holds an Estonian MTR license, an American MSB license, an Australian AUSTRAC license, and a Canadian MSB license.
Centralized exchanges face heightened scrutiny.
Following FTX’s collapse, centralized exchanges have faced increased regulatory scrutiny about their operations.
Several crypto exchanges like Beaxy and Bittrex were forced to exit the U.S. due to regulatory actions. Binance canceled its derivatives license with the Australian Securities and Investments Commission (ASIC) and closed its Canada operations.
Others like Coinbase and Gemini have expanded their operations abroad due to the uncertain regulatory environment in the U.S.
Meanwhile, CryptoSlate reported that these exchanges’ trading volume fell to $2.77 trillion in April — its lowest since December 2022.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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