Hotbit – a cryptocurrency exchange platform has announced that it will be shutting down all its Centralized Exchange (CEX) operations starting today May 22nd. The exchange expressed deep regret and cited three key reasons for carrying on with this decision.
Users have been advised to withdraw the remainder of their assets from the platform before June 21.
Hotbit stated that the major reason behind the shutdown was the “deterioration of operating conditions.” The exchange acknowledged that after suffering a weeks-long suspension in August 2022 due to an investigation, the crypto industry was faced with a series of crises, which include the collapse of FTX and other banking issues. According to the team, the incidents with the banks caused USDC to lose its $1 peg, which worsened the cash flow situation and ongoing outflow of funds from CEX users, including Hotbit.
As stated by the Hotbit team, the second reason for the decision is a supposed shift in the crypto industry trend. The exchange explained that“Centralized exchanges (CEX) have become increasingly cumbersome, with a lot of complex features and interconnected businesses that make compliance difficult to achieve for decentralization purposes. As a result, it is unlikely that they’ll align with long-term trends.”
In addition, the consecutive collapse of centralized institutions has caused the industry to either become increasingly decentralized or adopt a regulation. Hotbit agreed that the current uncertainty that has prevailed in the crypto industry recently has rendered various opportunities distraught with risks.
The team revealed that the exchange has suffered multiple cyber attacks and project flaws were exploited by malicious users, which resulted in huge losses. Hotbit commented, “The operation model of supporting a diverse range of assets is unsustainable from a risk management standpoint.”
We have seen a good number of other exchanges like LocalBitcoins cease operations too in recent times. Some crypto exchanges including Luno and Bittrex stopped operations in particular regions, while some others shut down totally, giving reasons which include bankruptcy and vague regulatory policies. Bittrex stopped its operations in the U.S. and Luno halted operations in Singapore. And as the list grows, FUD (fear, uncertainty, and doubt) continues to escalate within the crypto industry.
Featured Image Source: TechEconomy
