Crypto Giant Hotbit Suspends Activities, 5 Million Users To Withdraw Assets

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Hotbit, the popular crypto trading platform, has recently made the tough decision to discontinue all operations connected with its Centralized Exchange (CEX) starting 04:00 UTC, May 22nd. The firm, which boasts of a robust user base of five million crypto enthusiasts, has asked its clients to ensure the withdrawal of their remaining assets no later than 04:00 UTC, June 21st.

Sour Operating Conditions

The company cited several reasons for this pivotal decision, the foremost being a sharp decline in the industry’s operating conditions. The first signs of turmoil surfaced when Hotbit had to suspend activities temporarily for a few weeks in August 2022, following an investigation. 

Post this episode, the crypto industry faced a string of crises. The downfall of FTX and a banking crisis causing USDC off-peg incidents resulted in an incessant exodus of funds from CEX users, including Hotbit, exacerbating the cash flow situation.

Crypto Industry Dynamics

Another crucial reason that nudged Hotbit towards this decision is the changing landscape of the crypto industry. In the wake of the breakdown of numerous large centralized entities, the industry is observed splitting into two dominant trends. Entities are choosing either to align more with the regulations or to gravitate towards decentralization. 

According to Hotbit, the model of Centralized Exchanges (CEX) is increasingly unwieldy and laden with complex and interconnected businesses that present considerable compliance challenges. The company believes that this model is not conducive to long-term trends.

Diversified Assets: A Double-Edged Sword

Since its inception, Hotbit has distinguished itself by offering a wide variety of assets and value-added methodologies. It has been at the forefront in listing many emerging assets, including SHIB, KSM, GRIN, and others. 

Hotbit pioneered staking services starting with ATOM and was the first to conduct Defi mining business utilizing Compound. However, the company now sees this wide asset range as a potential liability. 

The industry’s unpredictable nature means that numerous opportunities are also fraught with risks. Hotbit has had its share of setbacks, including cyber-attacks and malicious users exploiting project defects, causing substantial losses. It is now choosing to conclude its show on a graceful note.