Hotbit, a cryptocurrency exchange, is shutting down, according to a statement issued on May 22. Hotbit, which currently supports the trading of various crypto assets, including Bitcoin, Ethereum, USDT, and others, says its clients have until 4:00 AM UTC on June 21, to withdraw their assets, and they will officially stop all exchange operations from today, May 22, at 4:00 AM, UTC.
The exchange cites various challenges ranging from the effects of the recent crypto winter to increasingly tight regulations. Considering these emerging changes, the exchange also gave a very bleak prediction about the future of crypto ramps saying they might not have a bright future.
Here’s Why Hotbit Is Shutting Down
As of May, Hotbit served over five million crypto traders, enabling the trading of various assets. However, factoring in what they say is the deterioration of operating conditions, they have chosen to wind down their operations. The exchange also highlighted extra obstacles after the suspension of operations in August 2022.
Since then, they mention that the cryptocurrency market has endured torrid and volatile conditions. For example, they point out the collapse of the FTX exchange in November 2022, the de-pegging of the USDC stablecoin in March 2023, and the bank crises, especially in the United States.
These events, Hotbit notes, have eroded investor confidence in centralized exchanges. Most coin holders, including those of Bitcoin and Ethereum, have chosen to move assets from top exchanges, of which Hotbit was not an exception.
Increasingly, the exchange notes that operating a centralized exchange (CEX) is gradually becoming problematic owing to the very sophisticated and linked structure of their operations. Subsequently, these complexities create added challenges when complying with regulator demands or attempting to be more decentralized.
The platform also addressed other issues, such as the significant dangers connected with particular assets and the frequent cyber assaults targeting their operations.
In their assessment, their business strategy of offering customers diverse investment opportunities was no longer viable from a “risk management standpoint.”
Exchanges Under Pressure?
Hotbit is shutting down less than a month after Bittrex, a cryptocurrency exchange, declared bankruptcy. Earlier, the United States Securities and Exchange Commission (SEC) had sued Bittrex for running an unregistered securities platform in which it allowed its citizens to trade assets illegally. However, Bittrex has since denied the SEC’s allegations.
The Commodity Futures Trading Commission (CFTC) and the SEC have also taken steps against Binance, the world’s largest cryptocurrency exchange by client count.
For instance, in Q1 2023, the CFTC sued Binance, alleging that it had violated the country’s trading laws by operating a trading platform without proper registration.
At the same time, the CFTC asserted that the exchange had not implemented sufficient anti-money laundering (AML) and know-your-customer (KYC) procedures.