The CEX Hotbit has announced that it is ceasing operations. Let’s have a brief look at their motives and what this means for the industry.
Tweet from Hotbit:
It’s time to take a bow
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 22, UTC 04:00. We kindly ask all…
— Hotbit News (@Hotbit_news) May 22, 2023
A quick browse through reveals the following reasons given for the closure:
- During August 2022, Hotbit was forced to suspend operations for several weeks during an investigation. Despite finally being cleared to resume operations, this was a major blow to the company.
- The collapse of FTX, temporary depegging of USDC, crises in the banking industry, etc. led to many users removing funds from centralised exchanges, preferring self-custody.
- Uncertain or even hostile regulatory and market conditions.
- Constant threat of cyber attacks and malicious users.
- The complications of managing risk with so many different assets.
Quite honestly, I think anybody that works in this industry can relate to these concerns. While it is true that there are great opportunities for those companies that are able to navigate the constantly shifting peaks, valleys, storms and droughts that the blockchain/web3/crypto space throws at them, it most certainly can feel like an uphill battle.
What does the Hotbit closure mean for the industry?
Honestly, without wanting to sound harsh or dismissive, I ultimately don’t think it will make a huge amount of difference. I personally believe that the CEX industry is overcrowded in any case. By the very nature or the centralised crypto industry, there is intense competition and it will be bound to display ever-increasing levels of centralisation and monopolisation, just as we see in other sectors. Very simply, that’s capitalism!
CEX; the banks of the cryptosphere
Just to finish off this very quick crypto newsflash, I feel I should mention something. CEX are in many ways like banks. Even the FTX collapse was due to – in my honest opinion – typical banker-like behaviour.
It’s not the whole banking industry that behaves this way, but as institutions I would be interested to speak to anyone that would not be willing to admit that they have tended to over-lend, over-leverage and become over-reliant on central banks to bail them out at the expense of everyday citizens.
Part of our mission here at FCF Pay is to provide an alternative to CEX for normal users; a set of hybrid centralised and decentralised tools that make it as easy – or even easier – to get into crypto than centralised exchanges do, but also provide simple options to use self-custodial wallets and on-chain transactions. Oh, and we will NEVER use our users’ deposits for our own operations (screenshot it!). You can never have a liquidity crisis – the crypto equivalent of a run on the bank – if you simply leave people’s money alone!
Leave your own thoughts in the comments. We’re always delighted to hear your opinions.
New blog post
"Hotbit Bites the Dust | Brief Overview"
In this post, @JustJoeHuman gives a brief overview of what's happened, why and what it means for the industry.https://t.co/oU0M5CN8pG#CEX #CryptoNews #Hotbit #Crypto #FCFpay pic.twitter.com/KSz85js399
— FCF PAY – Blockchain Payment System (@fcfpay) May 22, 2023
Very interesting Joe. Another great post. Keep them coming.
Won’t touch customers money, that’s refreshing but I guess if banks and CEXs use these funds to create a profit. How would FCF create a profit if they aren’t using those funds like the rest do?
Like any other payment gateway, whether fiat money or crypto, FCF creates profit through a small fee on reloading virtual or physical cards. Not only does FCF create a profit for its self as a business but also a portion goes to the holders. The more I read about FCF and what its trying to accomplish the more I’m astonished how undervalued this company is. The fact that FCF is able to bring utility to this space where 99% of crypto is built on hype and no real purpose amazes me.
Thanks for giving us an info (as I don’t follow everything closely) on relevant events in the Cryptosphere.
Also excellent to have a short Evaluation including an arc to FCF.
Keep up your great progress!
Thanks, Alex! I’m not sure how many news posts I’ll be able to do. Basically, I’ll post what jumps out at me from Twitter and comments on Telgram.
Hotbit reports 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. But what are the long-term trends?
Honestly, that confused me somewhat also.
I think I know what they mean with the increasingly interconnected businesses. At some point I’ve seen with my own eyes how the centralised crypto industry + the on and off-ramping industry are turning into a hot mess that are over dependent on a few suppliers. I might get into that stuff in future posts, but it’s a topic that is pretty touchy NDA-wise and FUD-wise. It’s basically what happens when the wrong people from the traditional finance world smell that a quick buck can be made.
The trends part of the statement just sounds like canned corporate nonsense to be honest, although I can’t be sure.
Sad to see but it’s the name of the game, especially in a bear market. Great article as usual! Nice to know that the FCF app won’t touch user funds, one of the most important things imo. Keep it up, can’t wait for the app!