Hotbit stated that centralized exchanges are becoming more complex and are “unlikely to meet long-term trends.”
Hotbit, a cryptocurrency exchange, made an announcement that it would cease operations as of May 22. Users were urged to withdraw funds by June 21 at 4:00 am UTC, according to the exchange.
The exchange stated in a statement that since a former member of its team was the target of an inquiry in August 2022, operating circumstances had gotten worse. The exchange claims that the probe forced it to halt business for several weeks.
In addition, Hotbit cited a number of instances in the cryptocurrency industry for its collapse. The exchange attributed it’s declining cash flow to the FTX collapse and the banking issues that led to the USD Coin de-pegging event. According to Hotbit, the incidents caused a steady outflow of money from centralized exchanges.
The Hotbit team also thinks centralized exchanges are “increasingly cumbersome” and “unlikely to meet long-term trends.” The only options, according to the exchange, are to adopt regulation or to grow more decentralized.
The exchange also highlighted frequent hacks and “project defects by malicious users” as contributing factors to its demise.
Several community members stated that they were unable to withdraw their funds from the exchange as soon as the announcement showed up.
How do we withdraw when the withdrawal option has been disabled? Please enable withdrawal so we can withdraw our assets https://t.co/gXlGpR4hOV
— laith (@laith2762) May 22, 2023
Some community members were also alerted about fraudulent links appearing as the official Hotbit exchange on Google.
While Hotbit is making its exit, other exchanges continue to function, some of which have started initiatives to address the problems in the cryptocurrency business. The cryptocurrency exchange Coinbase recently announced a campaign to “update the system.” OKX went even further by stating that it intends to “rewrite the system” in every way possible.