The Hotbit crypto exchange has suspended trading, deposit, withdrawal, and funding functions until further notice.
The exchange said that a former employee had worked on an unauthorized project that is now suspected of being involved in criminal activity. User assets are safe, the company confirmed in a tweet.
Hotbit is not the first crypto company in recent months to halt withdrawals. Crypto lender Celsius halted withdrawals in June and has now filed for bankruptcy.
Embattled Asian crypto exchange Zipmex announced earlier this month that it would pause transfers between its Z Wallet and its Trade wallets, citing market instability. It resumed withdrawals for some altcoins, such as Solana on Aug. 2, 2022, XRP on Aug. 4, 2022, and ADA on Aug. 9, 2022. Zipmex had exposure to Celsius and Babel Finance.
What will happen to Hotbit user funds?
While other crypto companies like Celsius froze withdrawals last month due to liquidity issues caused by leveraged positions, the authorities have frozen Hotbit’s assets in lieu of the investigation. Since the end of July, several senior managers have been subpoenaed by law enforcement and are cooperating in the investigation.
Hotbit added that its employees had no knowledge of any illegal activities and that its lawyers are in constant communication with authorities to unfreeze the exchange’s liquidity. Hotbit staff hails from China, Taiwan, and the U.S. The company, founded in 2018, boasts Hong Kong and Estonia registrations and is based in Shanghai and Taipei.
It offers 547 trading pairs to its over one million customers in over 170 countries. It has outsourced threat detection to SlowMist and BeoMist and has thus far experienced no security threats and losses of customer funds.
Concerning user funds, any unmatched open orders will be canceled to avoid losses when assets are unfrozen. The exchange reassured customers that users would be notified of a compensation plan when the website resumed operations.
Coinbase also being probed
U.S. giant Coinbase recently became the subject of a probe by the Securities and Exchange Commission for trading unregistered securities. One of its ex-employees was charged with insider trading recently.
Hotbit processed $350 million in trading volume in the last 24 hours, according to data from CoinMarketCap.