The old crypto adage “not your keys, not your coins” is relevant once again this week after popular crypto exchange Hotbit halted trading, deposits and withdrawals amid an ongoing criminal investigation concerning a former manager of the company.
In an August 10 blog post, the company announced that law enforcement had frozen “some funds of Hotbit” and thus it is unable to determine how long it will take to resume operations:
However, Hotbit didn’t disclose exactly which jurisdiction was investigating the exchange’s former employee:
A former Hotbit management employee who left Hotbit in April this year was involved in a project last year (which was against Hotbit’s internal principles and of which Hotbit was unknown) that law enforcement authorities now think is suspected of violating criminal laws.
Hotbit blog post
Compensation Plan in the Works
Hotbit stated that users’ unfilled open orders would be cancelled until the exchange resumes operations, and that leveraged ETF positions would be “forcibly liquidated to prevent further losses”.
On a side note, the exchange said it would come up with a compensation plan that will be published when “the website is resumed”.
The crypto bear market has not only drawn down cryptocurrency prices but caused a lot of institutional meltdowns in the industry. Hotbit is just the latest crypto firm to prevent users from accessing their funds.
Last month, Zipmex halted user withdrawals citing “circumstances beyond our control”, while another Singapore-based exchange, Hodlnaut, followed suit citing “market conditions”.
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