Hotbit takes a bow!

Another centralized exchange, Hotbit has shut down from operation. The Cryptocurrency exchange located in Shangai and Taipei announced this via their Twitter and Official website.

All users have been advised to withdraw their funds before June 21, UTC 04:00.

In an official release, they stated

“We want to say thank you and take a bow now,” the team wrote in the post. “We still believe in a bright future of crypto innovation and some of us will still fight for it.”

This is coming about 7 months after FTX shuts down.

Reasons for the shutdown

Hotbit management gave 3 reasons for the shutdown of the crypto exchange.

The operations of the exchange have deteriorated over the last couple of months, as a result, of a litany of issues which includes an investigation that started in August 2022.

There’s also a belief that centralized exchanges face uncertainty with the collapse of FTX and bank crises leading to USDC off-peg incidents. These events caused a continuous outflow of funds from centralized exchange (CEX) users, including Hotbit, and resulted in deteriorating cash flow.

It is becoming increasingly cumbersome to comply with highly complex and interconnected businesses, whether for compliance or decentralization, and they are unlikely to meet long-term trends.

What does this mean for centralized exchanges?

This is actually a tough time for centralized exchange as trust in them has begun to wane since the collapse of FTX in November last year

“Not your keys, not your crypto” is one of the basic rules to learn in the crypto industry. This will likely lead to crypto enthusiasts embracing decentralized exchanges to protect their assets.

While the Hotbit collapse has not led to a major financial loss for people using the exchange like what was experienced with FTX or the LUNA crash, it is important to be safe with decentralized exchanges than burn as this is happening In the same month, fellow centralized exchange Bittrex filed for bankruptcy, stating that it was not “economically viable” to continue running the business in the “current U.S. regulatory and economic environment.” Consequently, its demise occurred.