- Hotbit has announced that it will close down imminently
- The exchange blamed police action, the shift towards decentralized exchanges and the risks associated with running an exchange for its closure
- Users are advised to withdraw their coins asap
Hong Kong-based exchange Hotbit has announced its imminent closure following a range of issues that have made further operation impossible. In a blog post explaining the decision, Hotbit gave three reasons for its decision: police action against it last year that forced it to halt operations, a shift towards decentralized exchanges, and the various risks of operating a crypto exchange. Hotbit launched in early 2017 and enjoyed success in the bull run that followed, but clearly it feels that the future of the crypto market doesn’t lie with centralized exchanges.
Hotbit Was Forced to Temporarily Close Last Year
Hotbit made headlines last August when it suspended operations after an investigation was launched into a former employee who was alleged of violating criminal laws. At the time, Hotbit posted an announcement on its website to say that a “former Hotbit management employee” was part of a potentially illegal project and was subject to a police investigation.
This led to operations being suspended for “several weeks”, after which the entire crypto industry imploded, resulting in “continuous outflows of funds from CEX users, including Hotbit, and deteriorating cash flow.”
Risks Outweigh Benefits
Hotbit added in its message that there has been a “change in the crypto industry trend” which the exchange says has led to the industry being faced with two choices: either “embrace the regulation or become more decentralized”, with Hotbit clarifying its stance on things:
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.
Allied to this, Hotbit also said that the risks of running a centralized exchange outweigh the benefits, with the exchange subject to “numerous problems, such as repeated cyber attacks and the exploitation of project defects by malicious users” which it says resulted in “significant losses”.
Hotbit has advised all users to remove their funds asap as any funds left on the exchange may not be able to be returned them once the company enters the liquidation process.