• Hotbit says some of its senior managers were subpoenaed in July over an alleged criminal matter
  • The exchange expects to resume trade once frozen funds are returned but it’s unknown when that will be, if at all

Cryptocurrency exchange Hotbit has suspended trading, deposits and withdrawals after authorities froze some of its funds over a suspected violation of criminal law. 

The move to suspend services came after allegations that a former manager, who Hotbit said left in April, was involved in activities that went “against Hotbit’s internal principles,” the company said in a statement on Wednesday. 

Some of the platform’s senior managers were subpoenaed late last month and are cooperating with the agency’s investigation, it added.

Hotbit didn’t mention which jurisdictional agency is investigating its managers, or the total value of the frozen funds, although it appears unlikely to be from the US.

The company’s about page says it’s registered to both Estonia and Hong Kong while its based in Shanghai and Taipei. CB Insights lists Hotbit’s headquarters in Hong Kong while Crunchbase reports Beijing. 

Hotbit didn’t return Blockworks’ request for comment on its trade suspension and confirmation of where it’s headquartered by press time.

It expects to resume services once assets are unfrozen, but the firm isn’t sure when that will be. Hotbit, a smaller exchange relative to the likes of Binance and Coinbase, reported $350 million in trade volume over the past day, per CoinMarketCap.

The company claims other employees of Hotbit’s management, and the platform itself, were not involved in the alleged illicit activities under investigation.

“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,” Hotbit said in its announcement. “The assets of all users are safe on Hotbit.”

Unfulfilled open orders on the platform will be invalidated before services resume in order to prevent possible losses, and all leveraged ETF positions will be forcefully liquidated.

Founded in 2018, Hotbit says it has more than one million users from 170 countries. The firm’s core team members are from the US, China and Taiwan, and over 90% of its users are non-Chinese, according to its website

Last year, the platform suspended services for about a week after a cyberattack took down many of its services. The attackers also attempted to take control of the exchange’s wallets.

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    Shalini is a crypto reporter from Bangalore, India who covers developments in the market, regulation, market structure, and advice from institutional experts. Prior to Blockworks, she worked as a markets reporter at Insider and a correspondent at Reuters News. She holds some bitcoin and ether. Reach her at [email protected]