Hotbit is one of the top cryptocurrency exchanges on the global front. It has operated as a centralised exchange since its inception but recently closed its doors to users. Reasons for the Hotbit shutdown were made clear by the exchange in prior notices long before it finally halted operations on May 22nd 2023, UTC 04:00. However, the platform gave its users time to withdraw all their assets till June 30th, 2023.
Keep reading if you’re interested in crypto gist and curious about what happened to Hotbit. This article reveals the reasons for the Hotbit CEX operations shut down.
Overview of Hotbit
Hotbit was founded in 2018, with its operations based in Estonia and Hong Kong. It’s a digital asset trading platform, primarily a cryptocurrency exchange with about 7 million registered users spanning 210 nations. The platform rose through the ranks really fast and had a seat at the table with the big names in the centralised exchange category (CEX).
Hotbit supported over 400 cryptocurrencies and arguably had the best customer support team. Take a look at the features.
Features of The Hotbit Exchange
- The platform supported six languages: English, Russian, Turkish, Thai, Korean, Chinese and Thai.
- Listed over 700 cryptocurrencies and over 1000 trading pairs before shutdown.
- Did not require KYC during registration.
- The mobile app was available for trading on Android and iOS.
- Supported ETF trades with crypto.
- Diverse crypto trading pairs.
- High security and low trading fees.
Hotbit’s CEX Operations
A centralised exchange (CEX) is a digital trading platform that usually allows users to trade crypto using custodial wallets. Hotbit ran a CEX operation. It offered spot trading, ETF crypto trading and even DeFi token trades. CoinmarketCap pegged the exchange as one of the biggest and fastest-growing.
Hotbit listed many new coins first, facilitated a wide range of crypto trading pairs and offered staking services, ATOM being the first. The platform was not an on-off ramp – it didn’t support fiat deposits or withdrawals.
Why did Hotbit Shutdown CEX Operations?
In a somewhat emotional blog post, Hotbit announced its shutdown a few months back, scheduled for May 22nd, 2023.
“For 5 years and 4 months, the Hotbit team has been proud to participate in a wonderful crypto show with 5 million users. However, it is with great regret that we have made the decision to stop all CEX operations from May 22nd, UTC 04:00.” The first paragraph reads.
The blog post stated that Hotbit made this decision for three primary reasons, which we will discuss.
- A downswing in operating conditions.
- Radical changes in the crypto space.
- The associated risk of supporting a wide array of assets.
Let’s break these reasons down based on what was expressed in the announcement post.
1. Downswing in Operating Conditions
Hotbit expressed their sadness at how the management forcefully halted operations in August 2022 due to an investigation and how the FTX shutdown followed. A cascade of events followed and led to many CEX users pulling out their funds from exchanges, Hotbit included. This decline in cash flow hit Hotbit hard.
2. Radical Changes in The Crypto Space
Significant changes have occurred in the crypto industry, especially the crumbling of big centralised exchanges. These events pushed CEXs into a corner with two choices – become more regulated or decentralised. Hotbit concluded that running a CEX was a heavy burden and was becoming increasingly complicated. The trends will demand more compliance with heavy regulations when working with certain companies or bodies. So the only other option is decentralisation.
3. Risks Associated with Supporting Diverse Assets
Hotbit expressed that it had suffered a lot of challenges, such as recurring cyber-attacks and scammers leveraging the shortcomings of new projects. These challenges burned holes in the CEX’s pocket, financially and in user numbers. So Hotbit decided it was too risky to keep supporting a significant number of assets and projects as it had been doing. In general, it had become extremely challenging to run a centralised exchange.
Those are the reasons for the Hotbit CEX operations shutdown.
Impact of the Hotbit Shutdown on Users and Traders
As expected, Hotbit users and traders would be saddened by this news and even wary of using other CEXs. Considering the litany of previous CEX shutdowns, most crypto users will begin to consider the Web3 crypto exchange system, which is decentralised exchanges (DEXs).
Many crypto traders may find it difficult to find another CEX that offers all the services they enjoyed on Hotbit. Trading volume will reduce significantly for a while.
Thankfully, Hotbit announced the shutdown early enough and even gave a sufficient period of time for its users to withdraw all their assets. The initial deadline was June 21st, but in an update, the withdrawal deadline was extended to June 30th.
Hotbit’s Plan for the Future.
Since the announcement of the shutdown, the crypto exchange has not released an official statement on what it plans to do in the future. The only inkling the public has is a part of the announcement blog post. At the end of the post, Hotbit said it still believes in the future of crypto innovation and that some will still fight for it.
The statement does not give any clues on what the exchange plans to do in the coming months or years.
Alternatives to CEX Trading
Hotbit was a pacesetter for CEX crypto trading. However, since it has halted operations, users can look to other excellent alternatives, such as
- Coinbase
- Bitfinex
- Kucoin
- Kraken
- Gemini
Coinbase is a centralised exchange that lets users buy, sell, trade and store their cryptocurrencies and other digital assets. It runs a CEX system but offers a non-custodial wallet. On Coinmarketcap, it has the 2nd largest trading volume after Binance and a trust score of 10 on Coin Gecko. It’s one of the industry’s most liquid crypto trading platforms and is highly secure.
Bitfinex is another great CEX alternative for crypto holders who want to trade. It has a significant trading volume of about $98 million and has one of the highest liquidity rates in the crypto space. Users can trade, buy/sell or store digital assets on Bitfinex. It has tight security too.
Kucoin offers its users the chance to buy/sell and trade a wide range of available cryptocurrencies with very high security. Kucoin supports both spot and margin trading, giving interested traders options. With a trading volume of $631 million, the CEX stands firmly as a great alternative to Hotbit.
Coinmarketcap lists Kraken as the third biggest centralised exchange in terms of trading volume. Kraken allows spot and margin trading as well as buying and selling of crypto. It has a simple user interface and a robust website and mobile app security.
Gemini is another excellent alternative for CEX trading. The platform runs a custodial wallet where users can store their crypto. One can also buy/sell and trade in diverse digital assets, NFTs included. Gemini is a good choice for anyone looking for a regulated and licensed CEX.
FAQs on The Hotbit CEX Operations Shutdown
Q: What happened to the Hotbit exchange?
A: Hotbit exchange shut down operations on May 22nd 2023. Before the shutdown, it had operated as a centralised exchange for 5 years and 4 months. This cease of operations means that Hotbit users can no longer carry out any trade, buying or selling activities. They can also no longer store their crypto on the platform.
Q: Why is Hotbit shutting down?
A: Hotbit gave three primary reasons for its shutdown, which include a general decline in operating conditions, a rapid and constant change of the trends in the crypto industry and the burden of managing risks that come with supporting diverse assets and projects.
Q: Can I still withdraw my funds from Hotbit?
A: Users who still have assets on the Hotbit exchange platform have till June 30th to withdraw their holdings completely.
Conclusion
The announcement from the major crypto exchange to halt its operations shocked the crypto community. The reasons for Hotbit’s CEX operations shutdown seem valid. The reasons ranged from numerous cyber attacks and changes in the industry to a downswing in operating conditions. Although the exchange’s decision saddens its users, they must respect it and find an alternative CEX or migrate to DeFi.
The exchange has yet to reveal any plans to resume or migrate to decentralised operations. We hope the exchange decides to offer services, albeit different. But if it doesn’t, the crypto community will miss the excellence with which Hotbit served its users.
