Hotbit Shuts Down
• Hotbit announced it would halt all operations on May 22 by 04:00 UTC.
• The crypto exchange cited its investigations in August 2022, alongside FTX’s collapse and USD Coin (USDC) depeg as significant catalysts for its deteriorating operating conditions.
• Centralized entities are left embracing regulation or becoming more decentralized according to the exchange.
Background
Crypto exchange Hotbit announced it would halt all operations on May 22 by 04:00 UTC, advising its users to withdraw their assets before June 21. In a statement, Hotbit explained that centralized exchanges had witnessed a continuous outflow of funds following several crises that hit the crypto industry. The China-based exchange noted that the subsequent collapse of large centralized institutions had changed the crypto industry trend.
Catalysts for Deteriorating Operating Conditions
Hotbit cited its investigations in August 2022, alongside FTX’s collapse and USD Coin (USDC) depeg as significant catalysts for its deteriorating operating conditions. Besides that, the China-based exchange noted that the subsequent collapse of large centralized institutions had changed the crypto industry trend.
Centralized Entities Embracing Regulation or Becoming More Decentralized
According to Hotbit, centralized entities are left embracing regulation or becoming more decentralized. Hotbit wrote: “The Hotbit team believes that centralized exchanges (CEX) are becoming increasingly cumbersome, with highly complex and interconnected businesses that are difficult to comply with, while DEX [decentralized exchanges] offer greater flexibility but lack liquidity.“
Implications
The shutdown of Hotbit could have implications for other similar platforms which may face similar issues if they fail to adjust their models accordingly in order to survive in a rapidly changing environment. It is expected that more stringent regulations on CEXs will be introduced and some may not be able to keep up with these changes resulting in them having to close down operations temporarily or permanently due to financial losses incurred as a result of these regulations being implemented