Crypto exchange Hotbit has halted operations, citing a litany of issues and suggesting that centralized exchanges are unlikely to be viable long-term.
In a statement posted to the company’s website, Hotbit said its operations would cease in the early hours of May 22, and asked users to withdraw their remaining assets by June 21 at 4 am UTC.
“We want to say thank you and take a bow now,” the team wrote in the post. “We still believe a bright future about crypto innovation and some of us will still fight for it.”
The platform, which claims to have served 5 million users, put the decision down to deteriorating operating conditions, which were exacerbated by a forced suspension for several weeks in August last year when a former employee was placed under investigation.
Hotbit also said the direction of the crypto industry was leaving the future of centralized exchanges uncertain. With the collapses of FTX and other large crypto institutions, the industry has been left with a choice between either regulation or increased decentralization, the company said.
“The Hotbit team believes that centralized exchanges (CEX) are becoming increasingly cumbersome, with highly complex and interconnected businesses that are difficult to comply with, whether for compliance or decentralization, and are unlikely to meet long-term trends,” the post said.
The business also pointed to other problems including high risks on certain assets and repeated cyber attacks, which made its model of offering a wide range of investments “unsustainable.”
Tough time for centralized exchanges
Founded in January 2018, Hotbit is currently based in Shanghai and Taipei, according to its website.
It served users from more than 170 countries, most of whom were based outside of China, the platform said.
Its demise comes in the same month as fellow centralized exchange Bittrex filed for bankruptcy, saying it was not “economically viable” to continue to run the business in the “current U.S. regulatory and economic environment.”
The collapses of FTX and other high-profile centralized exchanges have increased skepticism of centrally-operated forms of crypto custody and trading, prompting calls for more people to hold their own crypto or trade on decentralized exchanges.
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