Key Points:
Hotbit indicated that the decision was made due to the worsening of operational circumstances, changes in the crypto industry’s trend, and the revelation that the operating model supporting varied assets is unsustainable.
Earlier, in August of last year, Hotbit published a notification stating that numerous top Hotbit executives had been summoned by law enforcement authorities since the end of July and that deposit and withdrawal services had been suspended, affecting more than 2 million users and being down for maintenance for more than a week.
The reason for this is that in April 2022, former Hotbit executives took part in a project that law enforcement authorities now think violated criminal legislation. Since the end of July, many top corporate officials have been subpoenaed by law authorities and are cooperating with the investigation. Moreover, law enforcement organizations blocked a portion of Hotbit’s money, leading the exchange to cease operations.
After that, the sector endured a succession of crises, including the demise of FTX, bank crises resulting in USDC off-peg occurrences, resulting in persistent withdrawals of money from the exchanges’ customers, including Hotbit, and a reduction in cash flow.
The recurring failures of huge centralized institutions have forced the sector to choose between embracing regulation and becoming more decentralized. The Hotbit team believes that centralized exchanges (CEX) are becoming more difficult to manage, with extremely complicated and interrelated companies to comply with, whether for or against decentralization and are unlikely to match long-term trends.
According to the announcement, the exchange has also endured multiple challenges, including as frequent cyber assaults and the exploitation of project vulnerabilities by malevolent users, resulting in large losses owing to the threat’s ambiguity. As a result, from a risk management aspect, the exchange variety that the operating model of supporting a variety of assets is unsustainable.
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Harold
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