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Shanghai exchange Hotbit suspends services as authorities probe ex-employee

Hotbit, a Shanghai exchange, has suspended deposits, withdrawals, trading, and funding functions following an investigation into a former employee that the exchange claims have impacted its operations.

In an announcement on August 10, the exchange revealed that it would automatically cancel all its users’ unfilled open orders to prevent losses due to market fluctuations. All leveraged ETF positions will be forcibly liquidated as well.

Despite the drastic actions, Hotbit sought to reassure its users that their funds were safe.

In a separate announcement, the exchange revealed that the halting of its services was due to an investigation by authorities into one of its former employees. The unnamed employee allegedly left the exchange four months ago. During his time at Hotbit, he was allegedly involved with a project suspected of criminal conduct.

In connection to this, several senior managers at Hotbit have been subpoenaed by authorities since July and are assisting in investigations.

How is all this connected to user funds, you ask? Well, the exchange claims that law enforcement has frozen its funds as it investigates the former employee.

“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,” the exchange, which also has offices in Taipei, said.

The halting of withdrawals has most Hotbit users worried. After all, this is the year in which the halting of withdrawals has been followed shortly after by a collapse and a subsequent Chapter 11 bankruptcy filing with the likes of Voyager Digital and Celsius Network.

It doesn’t make it any better that the communication from Hotbit is cryptic at best. And then there is the use of the tearful GIF of the animation character Anya Forger to announce to at least a million people (that’s how many users the exchange claims to have on its website) that they may be losing their money. At a time when tens of billions of dollars have been lost to digital asset companies, Hotbit users will certainly not appreciate the light manner with which the exchange seems to be handling the issue.

For now, all that Hotbit users can do is wait and hope that this is not yet another house of cards collapsing and taking casualties with it.

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