Hotbit Suspends Trading and Withdrawals Due to Criminal Investigation

Cryptocurrency exchange Hotbit has suspended trading, deposits, and withdrawals not because of “market conditions”, but an investigation into a former employee, the company said in a blog post on 12 August.

According to the announcement, law enforcement authorities have launched and investigation into a former employee of Hotbit, who was involved in an external project in 2021 that is suspected of violating criminal laws. As part of its investigation, the unnamed law enforcement agency froze some of the exchange’s funds, which was the reason behind Hotbit’s decision to pause all trading, deposits, and withdrawals on its platform. The exchange noted in its blog post:

“Law enforcement has frozen some funds of Hotbit, which has prevented Hotbit from running normally. Hotbit will resume normal service as soon as the assets are unfrozen. All user’s assets and data on Hotbit are secure and correct.”

The crypto exchange added that several of its senior managers have been subpoenaed by the law enforcement agency, and are actively assisting the investigation. While it did not reveal any information about the investigation, or the employee in question, Hotbit stated that its employees and management were not involved and had no knowledge of the external project.

In a separate blog post, Hotbit explained it will cancel all open orders while its services are suspended, and forcibly liquidate all leveraged exchange-traded fund (ETF) positions to prevent user losses. It will, however, continue to distribute income of user’s investment products. A “compensation plan” for users will also be published once the exchange has resumed its services.