Another one bites the dust! But this one's different. The Hotbit case.

dansus021

copper member

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Part of AOBT - English Translator to Indonesia

Quote from: bbc.reporter on May 23, 2023, 11:51:25 PM

What was the result of the criminal investigation on the exchange? Some questions being asked in social media are which country's regulator is investigating this case, what laws were broken, in which country did this occur, and what is the name of the employee?

However, the more important outcome from this is the depositors get their funds back.

I am former Hotbit User Maybe Hotbit comes from china or HongKong, there is actually similar case with china based exchange I didn't remember the exchange name, there is Bit in front of their exchange they exit scam with the same as hotbit did they said that china police seized all their asset and cannot return user deposit and the company is long gone by now.

Although what we know that hotbit give around 1 mont for us user to withdraw money but Last i checked that the withdraw button for btc usdt and eth is disabled https://bitcointalk.org/index.php?action=merit;msg=62286339 but I don't check it again

bbc.reporter

legendary

Activity: 3010

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Quote from: Who is John Galt? on May 22, 2023, 03:06:20 AM

The Hotbit exchange has just announced its final closure and has asked users to withdraw all their funds by June 21, UTC 04:00.

https://hotbit.zendesk.com/hc/en-us/articles/14750194236823

Quote

Dear Hotbit users,

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 users to withdraw their remaining assets before June 21, UTC 04:00.

This decision is based on three reasons:

Firstly, the deterioration of the operating conditions. After the Hotbit management team was forced to suspend operations for several weeks due to the investigation in August 2022 (https://hotbit.zendesk.com/hc/en-us/articles/8074249353495), the industry has experienced a series of crises, including the collapse of FTX, bank crises causing USDC off-peg incidents, resulting in continuous outflows of funds from CEX users, including Hotbit, and deteriorating cash flow.
Secondly, the change in the crypto industry trend. The successive collapse of large centralized institutions has led the industry to gradually in two ways: either embrace the regulation or become more decentralized. The Hotbit team believes 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.
Since its beginning, Hotbit has been characterized by providing a rich variety of assets and value-added methods. Hotbit was the first exchange to list numerous emerging assets, including SHIB, KSM, GRIN and so on, and was the first to offer staking services starting from ATOM, as well as the first to conduct Defi mining business using Compound. However, due to the industry's uncertainty, various opportunities also contain many risks. Hotbit has also suffered numerous problems, such as repeated cyber attacks and the exploitation of project defects by malicious users, resulting in significant losses. Therefore, the Hotbit team believes that the operation model of supporting a diverse range of assets is unsustainable from a risk management standpoint.
That’s all, with so many joys and tears, our show is over. We want to say thank you and take a bow now. We still believe a bright future about crypto innovation and some of us will still fight for it.

What was the result of the criminal investigation on the exchange? Some questions being asked in social media are which country's regulator is investigating this case, what laws were broken, in which country did this occur, and what is the name of the employee?

However, the more important outcome from this is the depositors get their funds back.

Who is John Galt?

sr. member

Activity: 336

Merit: 286

The Hotbit exchange has just announced its final closure and has asked users to withdraw all their funds by June 21, UTC 04:00.

https://hotbit.zendesk.com/hc/en-us/articles/14750194236823

Quote

Dear Hotbit users,

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 users to withdraw their remaining assets before June 21, UTC 04:00.

This decision is based on three reasons:

Firstly, the deterioration of the operating conditions. After the Hotbit management team was forced to suspend operations for several weeks due to the investigation in August 2022 (https://hotbit.zendesk.com/hc/en-us/articles/8074249353495), the industry has experienced a series of crises, including the collapse of FTX, bank crises causing USDC off-peg incidents, resulting in continuous outflows of funds from CEX users, including Hotbit, and deteriorating cash flow.
Secondly, the change in the crypto industry trend. The successive collapse of large centralized institutions has led the industry to gradually in two ways: either embrace the regulation or become more decentralized. The Hotbit team believes 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.
Since its beginning, Hotbit has been characterized by providing a rich variety of assets and value-added methods. Hotbit was the first exchange to list numerous emerging assets, including SHIB, KSM, GRIN and so on, and was the first to offer staking services starting from ATOM, as well as the first to conduct Defi mining business using Compound. However, due to the industry's uncertainty, various opportunities also contain many risks. Hotbit has also suffered numerous problems, such as repeated cyber attacks and the exploitation of project defects by malicious users, resulting in significant losses. Therefore, the Hotbit team believes that the operation model of supporting a diverse range of assets is unsustainable from a risk management standpoint.
That’s all, with so many joys and tears, our show is over. We want to say thank you and take a bow now. We still believe a bright future about crypto innovation and some of us will still fight for it.

Bitstar_coin

hero member

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SecureShift.io | Crypto-Exchange

It is not news that hotbit is among the shadiest exchange in the crypto space. Trading or doing any crypto transaction there is not safe let alone keeping your asset for more than necessary.

The best way to interact with exchange like hotbit (if you must) is do your transaction and withdraw to your personal wallet ASAP. Once upon a time I use to have an account with them and was because i need to liquidate my alts assets which was only trading in hotbit.
Centralized exchange is not a place to hold an assets and hotbit is certainly among the worst of them all.

o_e_l_e_o

legendary

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Quote from: examplens on September 13, 2022, 03:58:59 PM

I understood that they somehow "lost" certain funds. there is no clear confirmation as to how this happened

It is as I explained above, here: https://bitcointalksearch.org/topic/m.60846298

They took the coins which users deposited to their platform, handed them over a single individual, and that individual then deposited them on another exchange under his own personal account. When the user in question was arrested for helping to run a scam, his private accounts (which included a bunch of funds belonging to individual HotBit users) were all seized.

Quote from: examplens on September 13, 2022, 03:58:59 PM

I'm not sure about that scenario, because I believe that now a large number of users will withdraw funds ^{if it is really possible} from there.

Anyone in their right mind will immediately withdraw any and all assets they are allowed to withdraw as soon as possible.

malcovi2

member

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Quote from: examplens on September 13, 2022, 03:58:59 PM

Quote from: malcovi2 on September 12, 2022, 07:11:21 PM

Part 2 update:
https://hotbit.zendesk.com/hc/en-us/articles/8794402090263-The-Latest-Announcement-of-Hotbit-Platform-Part-2

The Deficit system
https://hotbit.zendesk.com/hc/en-us/articles/5237407755031

What I understand from the deficit system is they are going to airdrop affected users with a shitcoin that they use to stake it in their ponzi service, feel free correct me if I am wrong.
They are running away from the responsibility of refunding their customer's assets they need a better compensation plan.

I understood that they somehow "lost" certain funds. there is no clear confirmation as to how this happened, nor did they say transparently how much the deficit is exactly. but they promise that all future profits will be used to cover this loss.
I'm not sure about that scenario, because I believe that now a large number of users will withdraw funds ^{if it is really possible} from there.

There was no promise of future profits to cover the losses but they will airdrop you hotbit token a useless shitcoin exchange for the amount of what you lost. Also I thought that withdrawals are suspended but the hotwallet is starting to move out big amounts of tokens and ethereum

https://etherscan.io/address/0x562680a4dc50ed2f14d75bf31f494cfe0b8d10a1#tokentxns

500,000 USDT and 200 ETH were withdrawn.

examplens

legendary

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Crypto Swap Exchange

Quote from: malcovi2 on September 12, 2022, 07:11:21 PM

Part 2 update:
https://hotbit.zendesk.com/hc/en-us/articles/8794402090263-The-Latest-Announcement-of-Hotbit-Platform-Part-2

The Deficit system
https://hotbit.zendesk.com/hc/en-us/articles/5237407755031

What I understand from the deficit system is they are going to airdrop affected users with a shitcoin that they use to stake it in their ponzi service, feel free correct me if I am wrong.
They are running away from the responsibility of refunding their customer's assets they need a better compensation plan.

I understood that they somehow "lost" certain funds. there is no clear confirmation as to how this happened, nor did they say transparently how much the deficit is exactly. but they promise that all future profits will be used to cover this loss.
I'm not sure about that scenario, because I believe that now a large number of users will withdraw funds ^{if it is really possible} from there.

malcovi2

member

Activity: 1111

Merit: 76

Part 2 update:
https://hotbit.zendesk.com/hc/en-us/articles/8794402090263-The-Latest-Announcement-of-Hotbit-Platform-Part-2

The Deficit system
https://hotbit.zendesk.com/hc/en-us/articles/5237407755031

What I understand from the deficit system is they are going to airdrop affected users with a shitcoin that they use to stake it in their ponzi service, feel free correct me if I am wrong.
They are running away from the responsibility of refunding their customer's assets they need a better compensation plan.

examplens

legendary

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Merit: 3469

Crypto Swap Exchange

Quote from: o_e_l_e_o on August 30, 2022, 04:05:16 AM

Quote from: stompix on August 29, 2022, 09:49:23 AM

So they stopped trading to avoid user losses, but magically somehow the whole balance is gone, this makes me think they've lost a lot of actual coins and if somebody would swap them now they would be left with negative balances. But, it's for the "love" of their customers.

This is why they are asking for loans or mergers. They know as soon as they re-enable withdrawals (if they ever do), they will experience a huge volume of withdrawals and end up experiencing a bank run. Without a loan, they will have to shut everything down again plus declare insolvency. They know they messed up bad and are trying to preempt the fall out. Co-mingling funds like this is unforgivable.

To be honest, I don't expect that everything will run smoothly after the hack, especially not withdrawals. Which does not make me happy, because I have a lot of funds there, fortunately, a small amount.
what is strange to me is that they separated the spot and trading wallets before this incident. I'm even more convinced that all this was planned.

o_e_l_e_o

legendary

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Quote from: stompix on August 29, 2022, 09:49:23 AM

With every tweet it's like a tennis match from the amateur team to the scammer team, after their anime crying gif came this thing:
https://twitter.com/Hotbit_news/status/1561739497129361408

Yeah, I don't understand this at all. The balance shown on customers' accounts is obviously just pulled from an internal database like every other centralized exchange or platform. There is no reason that everyone's balance should suddenly start displaying zero, I would have thought?

Quote from: stompix on August 29, 2022, 09:49:23 AM

So they stopped trading to avoid user losses, but magically somehow the whole balance is gone, this makes me think they've lost a lot of actual coins and if somebody would swap them now they would be left with negative balances. But, it's for the "love" of their customers.

This is why they are asking for loans or mergers. They know as soon as they re-enable withdrawals (if they ever do), they will experience a huge volume of withdrawals and end up experiencing a bank run. Without a loan, they will have to shut everything down again plus declare insolvency. They know they messed up bad and are trying to preempt the fall out. Co-mingling funds like this is unforgivable.

stompix

legendary

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Blackjack.fun

Quote from: o_e_l_e_o on August 29, 2022, 04:57:08 AM

At best, that is completely amateurish business practices, and at worst pretty much an outright scam.

With every tweet it's like a tennis match from the amateur team to the scammer team, after their anime crying gif came this thing:
https://twitter.com/Hotbit_news/status/1561739497129361408

Quote

Dear Users❤️
If the estimated value of your assets shows "0", please don't worry, it's because the trading function is suspended. Please rest assured, all your funds are safe.
It will be normal after our trading function is recovered.

So they stopped trading to avoid user losses, but magically somehow the whole balance is gone, this makes me think they've lost a lot of actual coins and if somebody would swap them now they would be left with negative balances. But, it's for the "love" of their customers.

As for this "Sheep" guy, that's a serious lack of imagination, instead of calling him "scapegoat", they went for sheep Grin

o_e_l_e_o

legendary

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Quote from: malcovi2 on August 29, 2022, 12:24:53 AM

this one really caught my interest:

Here's the full announcement: https://hotbit.zendesk.com/hc/en-us/articles/8477769193239

A different part of that caught my interest:

Quote from: https://hotbit.zendesk.com/hc/en-us/articles/8477769193239

At the same time, law enforcement froze various personal accounts of Sheep, including his/her private account on a large crypto exchange, which caused liquidity problems for Hotbit. The reason is: the account is not stored with Sheep's private assets, but with Hotbit's assets used for Market Making.

So the coins you were depositing to Hotbit were then being deposited at other exchanges, not under Hotbit's account or control, but under the name, account and control of a single private individual. At best, that is completely amateurish business practices, and at worst pretty much an outright scam.

The part about mergers and acquisitions seems like they setting up the scenario in which current users will only receive back some small proportion of their funds, all while clearing Hotbit to continue to operate and make profits of other unsuspecting users. Very suspect all round.

malcovi2

member

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there was a new update:

this one really caught my interest:

Hotbit team is currently looking for opportunities for mergers & acquisitions or loans. Our offer is: as long as the other party can ensure that 100% of all user funds could get redeemed, we are happy to discuss any other terms.

I think Hotbit has been a naughty kid using their clients money for their personal expenses and now they are lacking funds for liquidity.

fortunecrypto

legendary

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Quote from: Darker45 on August 10, 2022, 09:44:53 PM

All that's happening with centralized platforms recently makes me cringe. It chills me to the bone! If others are still trusting centralized platforms until now, it's time to rethink seriously.

This is not the first time and this will not be the last time besides this scenario hacking is very prevalent, these exchanges should understand that
the market is very dynamic and the price changes almost every minute, traders can make a profit from their trading but now that they hostage investors' funds they lose their chance to make a profit, this is one of the risks of a centralized exchange and people should think twice and be aware of the risk of sitting your coins in a centralized exchange, even if the exchange is popular the risks are still there.

o_e_l_e_o

legendary

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Quote from: Fivestar4everMVP on August 28, 2022, 06:35:22 AM

and one question i keep asking myself each time issues like this come up is "why always the users/investors who have to suffer the most loss in situations like this, even when the issue has nothing to do with the users/investors?"

Because those are the terms you agree to when you use these custodial platforms. Every single one of them will have a clause or clauses hidden somewhere in the terms of use or service which states that any and all coins you deposit to their platform cease to be yours, you give up all ownership rights to these coins and transfer full ownership to the platform, and the platform can do pretty much anything they like with those coins and you have absolutely no legal recourse whatsoever. And in the event of bankruptcy or similar, then you will be treated as an "unsecured creditor", which means you are literally the last person on the list to get back anything at all and that all the coins you deposited to the platform will preferentially be used to pay off the "secured creditors", which are usually banks and other large financial institutions.

The fact that 99% of people do not bother to read or understand these terms prior to signing up does not make them any less legally binding. If you don't want to lose your coins to these platforms, then the answer is very simply - stop using them.

Fivestar4everMVP

legendary

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Leading Crypto Sports Betting & Casino Platform

Quote from: Darker45 on August 10, 2022, 09:44:53 PM

But why include all of the users' funds? Why the sudden freeze of the rest of the users' trading and withdrawal functions? Moreover, orders were all canceled. And, worse, "all leveraged exchange-traded fund positions will be liquidated." Finally, there's "no timeframe for resumption" of all activities.

First, I want to say that this is the first time I am coming across this news and I am highly surprised because I used the hotbit exchange to trade some altcoins some few days back, fortunately for me, (like I knew something like this was going to happen), I was really skeptical about leaving the money on there though I had no use for it at the time, I withdrew the money to my private wallet, and it is still there even as I type, now I imagined if I left that money on the exchange, by now, my funds would be frozen on an account of what I know nothing about.

Indeed - Not your key, Not your crypto!.

Quote

All that's happening with centralized platforms recently makes me cringe. It chills me to the bone! If others are still trusting centralized platforms until now, it's time to rethink seriously.

I totally agree with you mate, infact, i am more perplexed than you are right now, and one question i keep asking myself each time issues like this come up is "why always the users/investors who have to suffer the most loss in situations like this, even when the issue has nothing to do with the users/investors?"

libert19

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Quote from: AmoreJaz on August 18, 2022, 06:40:22 PM

Quote from: carlfebz2 on August 18, 2022, 06:34:29 PM

Quote from: libert19 on August 18, 2022, 02:10:40 PM

Hotbit, they have had habit of listing tokens left and right, then disable withdrawals abruptly. Was shady from start.

If people do make out some simple research at least then they might able to avoid this place or platform on the first place.

https://bitcointalksearch.org/topic/scam-hotbit-exchange-withrawal-not-working-5313616
https://bitcointalksearch.org/topic/hotbitio-is-big-scam-5180896
https://bitcointalksearch.org/topic/stay-away-from-hotbit-exchange-5113530

I was aware of this platforms name and able to hear off but i havent tend to make use of it
considering that i do always stick out on the best ones out there.

another reason why you need to get out your funds out of these exchanges once you finished your trading. this is true for all exchanges. we can't trust any trading platform these days. this is why it is always best to store your coins in your own wallet, with your own keys. i had used hotbit before, but once i finished trading my token, i immediately transferred my funds out of this exchange. i guess, people need a lot of lessons before they finally come to realize that they should not trust these exchanges.

You were lucky you got your funds transfered, often on these exchanges you lose your money the moment you deposit.

AmoreJaz

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Quote from: carlfebz2 on August 18, 2022, 06:34:29 PM

Quote from: libert19 on August 18, 2022, 02:10:40 PM

Hotbit, they have had habit of listing tokens left and right, then disable withdrawals abruptly. Was shady from start.

If people do make out some simple research at least then they might able to avoid this place or platform on the first place.

https://bitcointalksearch.org/topic/scam-hotbit-exchange-withrawal-not-working-5313616
https://bitcointalksearch.org/topic/hotbitio-is-big-scam-5180896
https://bitcointalksearch.org/topic/stay-away-from-hotbit-exchange-5113530

I was aware of this platforms name and able to hear off but i havent tend to make use of it
considering that i do always stick out on the best ones out there.

another reason why you need to get out your funds out of these exchanges once you finished your trading. this is true for all exchanges. we can't trust any trading platform these days. this is why it is always best to store your coins in your own wallet, with your own keys. i had used hotbit before, but once i finished trading my token, i immediately transferred my funds out of this exchange. i guess, people need a lot of lessons before they finally come to realize that they should not trust these exchanges.

carlfebz2

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DGbet.fun - Crypto Sportsbook

Quote from: libert19 on August 18, 2022, 02:10:40 PM

Hotbit, they have had habit of listing tokens left and right, then disable withdrawals abruptly. Was shady from start.

If people do make out some simple research at least then they might able to avoid this place or platform on the first place.

https://bitcointalksearch.org/topic/scam-hotbit-exchange-withrawal-not-working-5313616
https://bitcointalksearch.org/topic/hotbitio-is-big-scam-5180896
https://bitcointalksearch.org/topic/stay-away-from-hotbit-exchange-5113530

I was aware of this platforms name and able to hear off but i havent tend to make use of it
considering that i do always stick out on the best ones out there.

libert19

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Hotbit, they have had habit of listing tokens left and right, then disable withdrawals abruptly. Was shady from start.

tbterryboy

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Quote from: crwth on August 12, 2022, 04:52:27 AM

It's unfortunate for the users of that exchange. They didn't do anything, and they get to be frozen out of their funds. But if the business isn't compliant with anything, then it's a time bomb with what they will do with their operations. They have probably looking for a fall guy or something with what they have done, and it is fishy just to do that and make people feel that it is still there. It's probably gone now.

If only they did their research carefully, they will know that this is one of the risks here in cryptos or when using a centralized exchange rather. It is their full responsibility whatever happens to their funds and not the platform that they are using. There must be a reason with this on why innocent users are affected.

For now let us not talk negatively. Maybe what you are thinking isn't true and once the funds are unfrozen again, it will be safe if users will just withdraw most of their money if not all and then transfer to a much secure place like hardware wallets. If they want to continue their trading journey then they better switch to other platforms.

malcovi2

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Quote from: stompix on August 15, 2022, 09:19:26 AM

Also, they actually used an anime gif for their announcement?
https://twitter.com/Hotbit_news/status/1557347934983061504
Realllyyyy? Huh

Thats how unprofessional they are and also last year they were using pictures of beautiful chinese women as a profile pic in their telegram accts.

stompix

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Blackjack.fun

Quote from: Darker45 on August 11, 2022, 08:57:25 PM

The authorities seem to know what they are doing. There's an investigation going on, yes, but the freezing of all of the users' funds is not the order of the authorities. The order to put a halt to all of the exchange's activities including deposits and withdrawals is not coming from the authorities. The cancelation of all unfilled orders and the forcible liquidation of all leveraged positions is not done in compliance with the investigating authorities' decision. They're all decisions of Hotbit.

I don't know how things work in Hong Kong and what the actual case is there but here in Europe an account that holds money that is part of investigation will be frozen no matter the value of the claims, so without an appeal of the exchange to a superior court to unfreeze some of the funds, proving that this is outside the investigation all the amount will be frozen even if the exchange has $10 million and they are accused of $100 in money laundering. If the investigation doesn't have complete information on how much the illegal amount goes up to and where and how are those administrated all! all funds are going to be frozen, including accounts that are used for paying for stuff and including wages that need to be paid to employees.

Quote from: o_e_l_e_o on August 13, 2022, 05:21:09 AM

Another possibility would be that since they are most likely operating a fractional reserve system like every other lending platform with a very small amount of funds actually in reserve, that although the authorities have only frozen some of their funds that this represents a large proportion of the funds they actually have access to in their own wallets and therefore pushed them in to liquidity issues.

If they have operated like this and the actual amount they have at hand is lower than the claims they are gone and nobody will see a penny back.
How big was it ? Coingecko is not showing it in the search and I don't trust those numbers they claim, 7 million users my ass!

Also, they actually used an anime gif for their announcement?
https://twitter.com/Hotbit_news/status/1557347934983061504
Realllyyyy? Huh

examplens

legendary

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Crypto Swap Exchange

Quote from: o_e_l_e_o on August 13, 2022, 05:21:09 AM

They are stating on Twitter that all funds are safe (how many times have we heard that?) and they expect the freeze to "not be too long" (whatever that means).

as far as I remember, all their previous hacks where they temporarily closed the exchange lasted between two and four weeks. I believe that it will be like that now, for at least two weeks.

Quote from: o_e_l_e_o on August 13, 2022, 05:21:09 AM

Hopefully no one actually loses their money here, but damn, how are people still trusting these platforms given what has happened over the last few weeks/months?

Some altcoins (I'm not going to say shitcoins) are the easiest to sell there. I, for example, did not manage to convert to TRX (TRX instead of bitcoin because of the high fee), now I have some funds locked up there.

malcovi2

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Quote from: o_e_l_e_o on August 13, 2022, 05:21:09 AM

Quote from: Darker45 on August 11, 2022, 08:57:25 PM

-snip-

Another possibility would be that since they are most likely operating a fractional reserve system like every other lending platform with a very small amount of funds actually in reserve, that although the authorities have only frozen some of their funds that this represents a large proportion of the funds they actually have access to in their own wallets and therefore pushed them in to liquidity issues.

They are stating on Twitter that all funds are safe (how many times have we heard that?) and they expect the freeze to "not be too long" (whatever that means).

Hopefully no one actually loses their money here, but damn, how are people still trusting these platforms given what has happened over the last few weeks/months?

Yeah, I thought they would die last year because this wasn't their first time freezing everything in their website. I guess this is why scammers are flooding in into crypto because it so easy to scam when there are many gullible people.

o_e_l_e_o

legendary

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Quote from: Darker45 on August 11, 2022, 08:57:25 PM

-snip-

Another possibility would be that since they are most likely operating a fractional reserve system like every other lending platform with a very small amount of funds actually in reserve, that although the authorities have only frozen some of their funds that this represents a large proportion of the funds they actually have access to in their own wallets and therefore pushed them in to liquidity issues.

They are stating on Twitter that all funds are safe (how many times have we heard that?) and they expect the freeze to "not be too long" (whatever that means).

Hopefully no one actually loses their money here, but damn, how are people still trusting these platforms given what has happened over the last few weeks/months?

crwth

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https://linktr.ee/crwthopia

It's unfortunate for the users of that exchange. They didn't do anything, and they get to be frozen out of their funds. But if the business isn't compliant with anything, then it's a time bomb with what they will do with their operations. They have probably looking for a fall guy or something with what they have done, and it is fishy just to do that and make people feel that it is still there. It's probably gone now.

Potato Chips

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yesssir! 🫡

Quote from: noorman0 on August 10, 2022, 11:16:54 PM

it's a bit strange if Hotbit claims to be headquartered and comply with Hong Kong regulations.

Well, the only hotbit out there in hongkong is marked as "dissolved" (unless they go by a different name).

Quote from: https://hongkongcompanysearch.com/en/company/fJTW1Tuuc6tH1my9892SI26L1.html

Cancellation Date: September 04,2020
Active Status: Dissolved

Quote from: https://hkg.databasesets.com/en/gongsimingdan/number/2597208

Date of Dissolution/已告解散日期：2020-09-04

It's interesting because they still claim to be registered according from their about us... so I couldn't help but to look into Estonia's as well only to find out they were registered only a year ago despite hotbit claiming longer than that.

Quote from: https://ariregister.rik.ee/eng/company/16199713/Hotbit-Europe-OÜ?

Registered 06.04.2021

All this lying ain't a good sign. Makes me even more on the fence about the whole thing since we don't have any outside info at the moment.

NeuroticFish

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Quote from: Darker45 on August 11, 2022, 08:57:25 PM

The order to put a halt to all of the exchange's activities including deposits and withdrawals is not coming from the authorities. The cancelation of all unfilled orders and the forcible liquidation of all leveraged positions is not done in compliance with the investigating authorities' decision. They're all decisions of Hotbit.

Actually it can be also ordered by authorities, if they're investigating something else/something more, like, for example, inside trading, hack, missing funds.
However, as I said, I feel like Hotbit is either lying, either hiding some of the truth.

Darker45

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Quote from: noorman0 on August 10, 2022, 11:16:54 PM

That's part of the investigation.

Quote from: PX-Z on August 10, 2022, 11:22:52 PM

Users funds are considered as exchange funds, and exchange funds are considered as executive/Sr. member's money. And the halt is requested by the authorities so there's no way anyone on the exchange team can do about it, much more their users.

Quote from: Charles-Tim on August 11, 2022, 03:41:58 AM

They are centralized, they have to comply with government policies and regulations, government can control the exchange, but the exchange have control over customers.

The authorities seem to know what they are doing. There's an investigation going on, yes, but the freezing of all of the users' funds is not the order of the authorities. The order to put a halt to all of the exchange's activities including deposits and withdrawals is not coming from the authorities. The cancelation of all unfilled orders and the forcible liquidation of all leveraged positions is not done in compliance with the investigating authorities' decision. They're all decisions of Hotbit.

The authorities only ordered a freeze to some of the exchange's suspicious funds. Furthermore, they're only inviting a number of senior managers for assistance. They didn't issue a blanket order.

And what now if a former employee is under investigation? Does that justify the freezing of all users' funds? I don't think so. A former Coinbase employee was also investigated for possible criminal violations, Coinbase didn't freeze all of its users' funds. Coinbase's CEO itself was also under investigation, Coinbase didn't halt all of its services. The same goes with Binance, BitMEX, and other exchanges that are also investigated for various violations. But they didn't stop operating.

Which led me to think that NeuroticFish's suspicion is right.

Quote from: NeuroticFish on August 11, 2022, 02:56:40 AM

I have a feeling that this is just a cover. I have a feeling they may be using the problems (if real) related to the former employee in order to do this or that, probably because their funds were not looking as good as they should.

Quote from: o_e_l_e_o on August 11, 2022, 05:37:40 AM

If a single employee being accused of insider trading or some other financial crime is enough to result in an exchange having a majority of their assets frozen and therefore forcing them to suspend all activities for their users, then every customer of every exchange is taking an even bigger risk than previously thought by leaving any coins on those platforms. Not only do you have all the usual risks of scams, thefts, hacks, insolvency, etc, etc., but now you also have to trust every single one of their employees not to do something risky or stupid which could end up in your funds being inaccessible.

Exactly! This is such a terrifying precedent if that's the case.

malcovi2

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So, a day has passed and it seems that the law enforcement involve is so secretive that no news agency covered this so-called criminal activity.

Rikafip

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Quote from: malcovi2 on August 10, 2022, 11:44:10 PM

I remember these guys going over to different telegram groups offering listing service and they were also blatant about it to offer proof that they are indeed working for hotbit.

Basically all Tier 2 and below exchanges have their people spamming Telegram groups and offering listing (majority are fake of course but legit ones do exist) so this is nothing out of ordinary.

Quote from: Darker45 on August 10, 2022, 09:44:53 PM

If others are still trusting centralized platforms until now, it's time to rethink seriously.

I don't think that many (those who trust/use them) will change their opinion about centralized exchanges after this thing with Hotbit. These things happened before and will keep happening in the future and people keep using using CEXes more and more.

DaveF

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Not QUITE the same but.....
Here in the US most banks are insured by the FDIC Federal Deposit Insurance Corporation more or less it covers peoples deposits in banks up to a certain amount ($250000 it most cases).
If the bank becomes insolvent OR if the bank does not meet certain requirements the FDIC steps in and does 2 things.

It freezes the accounts in the bank usually for a couple of days at most to do an audit

Then it either has another bank take over the bank and keep it running. OR it cuts checks to the people who had money in the bank.

HOWEVER, there have been times when what should have been a couple of days took a couple of weeks.
No different then here, but back before BTC and "not your keys not your coins" people were discussing "cash not in hand is not your cash"

Yes this is supposedly a criminal investigation but in the end if you don't have it, it's not yours.....

-Dave

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Many won't believe on their reasoning, it sounds like it is what it is but with all of these issues coming from centralized exchanges, there's nothing those users can do if their funds are still there.

This is really worrisome and you just can't remove the thought of what if this happens to the other known ones like Binance and other exchanges on the same level.

Well, the only thing we can do is to don't put all of your funds in any of them if you've got no plans of using it for trading.

o_e_l_e_o

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Quote from: malcovi2 on August 10, 2022, 11:44:10 PM

it could be a possible insider-trading case.

That would be very interesting if that was the case, especially given the recent news that a Coinbase employee is being charged with insider trading. If a single employee being accused of insider trading or some other financial crime is enough to result in an exchange having a majority of their assets frozen and therefore forcing them to suspend all activities for their users, then every customer of every exchange is taking an even bigger risk than previously thought by leaving any coins on those platforms. Not only do you have all the usual risks of scams, thefts, hacks, insolvency, etc, etc., but now you also have to trust every single one of their employees not to do something risky or stupid which could end up in your funds being inaccessible.

Charles-Tim

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Quote from: Darker45 on August 10, 2022, 09:44:53 PM

It's funny, worrisome, and mind-boggling how a centralized platform could have all kinds of reasons for freezing funds.

They are centralized, they have to comply with government policies and regulations, government can control the exchange, but the exchange have control over customers. This is absurd to me, Hotbit's customers are now the collateral damage. But this does not go beyond the saying that 'not you key not you coin'.

Quote from: noorman0 on August 10, 2022, 11:16:54 PM

That's part of the investigation. Fyi, hotbit does not adopt a KYC system for any amount of customer transactions like other centralized exchanges (unless they request it personally).

Are you implying that some events can not occur which can make this kind of event to happen to exchanges that fully have verified customers, it may not be the same event as this news, but we should know that we sell away our privacy and full control of our funds when using centralized platforms.

NeuroticFish

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Quote from: Darker45 on August 10, 2022, 09:44:53 PM

The reason? One of their former employees was suspected by law enforcement authorities of being involved in a questionable project. As a result, some senior managers were asked to cooperate in the investigation. Some funds of the exchange was also ordered frozen.

But why include all of the users' funds? Why the sudden freeze of the rest of the users' trading and withdrawal functions? Moreover, orders were all canceled. And, worse, "all leveraged exchange-traded fund positions will be liquidated." Finally, there's "no timeframe for resumption" of all activities.

I have a feeling that this is just a cover. I have a feeling they may be using the problems (if real) related to the former employee in order to do this or that, probably because their funds were not looking as good as they should. Is there any other side of the story available, or only what HotBit officials say?

However, we'll find out in time. And the users having funds there.. yeah Sad

not your keys, not your coins.

NotATether

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Quote from: Darker45 on August 10, 2022, 09:44:53 PM

All that's happening with centralized platforms recently makes me cringe. It chills me to the bone! If others are still trusting centralized platforms until now, it's time to rethink seriously.

That's why it's important to have a backup exchange with KYC readt to use if the lifelines to one get servered (of course, not your keys, not your coins, but I'm saying this strictly for the case of buying/selling crypto to and from banks).

malcovi2

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I remember these guys going over to different telegram groups offering listing service and they were also blatant about it to offer proof that they are indeed working for hotbit.

it could be a possible insider-trading case.

PX-Z

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Quote from: Darker45 on August 10, 2022, 09:44:53 PM

But why include all of the users' funds? Why the sudden freeze of the rest of the users' trading and withdrawal functions? Moreover, orders were all canceled. And, worse, "all leveraged exchange-traded fund positions will be liquidated." Finally, there's "no timeframe for resumption" of all activities

Users funds are considered as exchange funds, and exchange funds are considered as executive/Sr. member's money. And the halt is requested by the authorities so there's no way anyone on the exchange team can do about it, much more their users.

This is a unique case^{(i guess? never heard something like this before)} to apply the "not your keys, not your coins".
Not as worse as a hack incident but this could also give a higher chance to lock up the money of all users in a way longer time depends on the authorities investigation outcome.

noorman0

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Quote from: Darker45 on August 10, 2022, 09:44:53 PM

-snip-
But why include all of the users' funds? Why the sudden freeze of the rest of the users' trading and withdrawal functions? Moreover, orders were all canceled. And, worse, "all leveraged exchange-traded fund positions will be liquidated." Finally, there's "no timeframe for resumption" of all activities.

That's part of the investigation. Fyi, hotbit does not adopt a KYC system for any amount of customer transactions like other centralized exchanges (unless they request it personally). Actually, it's a bit strange if Hotbit claims to be headquartered and comply with Hong Kong regulations. And now the consequences for customers with that convenience befall, when their insiders are involved in criminal activities then anyone becomes the target of investigation by legal authorities, including normal customers.

Darker45

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It's funny, worrisome, and mind-boggling how a centralized platform could have all kinds of reasons for freezing funds.

Crypto exchange Hotbit suddenly froze its users' funds as well as the deposit, withdrawal, and trading functions of the platform. The reason? One of their former employees was suspected by law enforcement authorities of being involved in a questionable project. As a result, some senior managers were asked to cooperate in the investigation. Some funds of the exchange was also ordered frozen.

But why include all of the users' funds? Why the sudden freeze of the rest of the users' trading and withdrawal functions? Moreover, orders were all canceled. And, worse, "all leveraged exchange-traded fund positions will be liquidated." Finally, there's "no timeframe for resumption" of all activities.

All that's happening with centralized platforms recently makes me cringe. It chills me to the bone! If others are still trusting centralized platforms until now, it's time to rethink seriously.

1. https://cointelegraph.com/news/crypto-exchange-hotbit-says-it-froze-customer-funds-due-to-alleged-criminal-ties-of-formal-employee

Topic: Another one bites the dust! But this one's different. The Hotbit case. (Read 596 times)