Asian cryptocurrency exchange Hotbit announced the suspension of all functions on the platform and would resume crypto services when law enforcement authorities unfreeze the company’s funds.
Hotbit Suspends Services Indefinitely
Hotbit announced the news of the suspension in a blog post on Wednesday (August 10, 2022). According to the crypto exchange, the platform is halting all functions including deposits, trading, withdrawals, and funding, until further notice.
Explaining the reason for the service suspension, Hotbit said that law enforcement was investigating a former management employee of the company who was involved in an external project in 2021, in contravention of the company’s internal principles.
According to Hotbit, the crypto exchange and other workers were unaware of the project, and neither were they involved. Authorities, meanwhile, suspect that the project violated criminal laws.
Consequently, law enforcement froze some of Hotbit’s assets, which affected the exchange’s day-to-day operations. Senior executives of the company were also served subpoenas and are assisting with the investigation.
“Hotbit and the rest employees of Hotbit’s management are not involved in the project and have no knowledge of the illegal information involved in the project. However, we are still actively cooperating with the law enforcement authorities in their investigations and are continuously communicating with them through our lawyers and applying for the release of the frozen assets.”
While there is no exact date on when Hotbit will lift the suspension, the exchange hopes to resume services when funds are unfrozen, stating that “assets of all users are safe on Hotbit.”
Growing List of Crypto Exchanges Halting Withdrawals and Deposits
The latest development comes shortly after Singapore-based crypto lending platform Hodlnaut also halted all activities, stating that the company carried out the decision to focus on stabilizing its liquidity and protecting assets.
Hodlnaut will also withdraw its license application from the Singaporean regulator, the Monetary Authority of Singapore, which means that the platform will cease its token swap feature.
“We are actively working on the recovery plan that we hope to provide updates and details on as soon as permissible. We are consulting with Damodara Ong LLC on the feasibility and timelines of our intended execution plan and are strategizing our recovery plan with our users’ best interests in mind.”
Meanwhile, Hotbit becomes the latest cryptocurrency exchange to suspend deposits and withdrawals. Unlike the reason Hotbit gave for its suspension, other companies have carried out similar actions because of the bear market.
Celsius, Voyager Digital, Three Arrows Capital, Vauld, Zipmex, CoinFLEX, and Babel Finance, among others have been reported to pause withdrawals. Some of these firms have gone ahead to file for bankruptcy.
Crypto lender Celsius, which is facing several legal troubles, filed for chapter 11 bankruptcy in July 2022. Vauld also filed a moratorium against its creditors, to enable the platform to focus on its restructuring plans.
Voyager, on the other hand, recently received permission from a U.S. court to return $270 million to its customers.