Cryptocurrency exchange Hotbit has announced via a statement that it will be ceasing all operations. The exchange cited numerous challenges, including the effects of the recent crypto winter and increasingly tight regulations. Clients have until June 21 to withdraw their assets.
Hotbit served over five million crypto traders as of May, but the exchange noted deteriorating operating conditions as one of the reasons to wind down operations. Furthermore, the suspension of operations in August 2022 created extra obstacles. The exchange notes that investor confidence in centralized exchanges has diminished after events such as the collapse of FTX exchange in November 2022 and the de-pegging of the USDC stablecoin in March 2023.
Hotbit found that operating a centralized exchange (CEX) is gradually becoming problematic due to the complex and linked nature of their operations, creating added challenges when complying with regulator demands and attempting to be more decentralized. Other issues mentioned include the significant dangers connected with particular assets and the frequent cyber assaults targeting their operations.
Hotbit is shutting down less than a month after Bittrex, a cryptocurrency exchange, declared bankruptcy, with the SEC suing them for running an unregistered securities platform in which it allowed US citizens to trade assets illegally. The CFTC and SEC have also taken steps against Binance, the world’s largest cryptocurrency exchange by client count. The CFTC sued Binance in Q1 2023, citing violation of trading laws by operating a trading platform without proper registration along with insufficient anti-money laundering (AML) and know-your-customer (KYC) procedures.