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Crypto Exchanges Hotbit And Bitfinex Face Regulatory Headwinds

Assets of a China-based crypto exchange platform Hotbit, have been frozen, which forced the company to cease withdrawals in the interim. According to Hotbit, it has suspended all trading, deposit, withdrawal and funding until the ongoing investigation into her former employee is over and their account becomes functional. 

“A former Hotbit management employee who left Hotbit in April this year was involved in a project last year (which was against Hotbit’s internal principles and of which Hotbit was unknown) that law enforcement authorities now think is suspected of violating criminal laws,” the Hotbit exchange explained.

The exchange said that law enforcement has frozen some of the company’s funds and also subpoenaed some of its senior managers. According to Hotbit, the frozen funds have prevented the company from running a business properly.

In another update, the company assured users that unfilled open orders will be cancelled to avoid losses, liquidate all users’ leveraged exchange-traded fund (ETF) positions and draft a compensation plan for users upon resumption of operations.

Meanwhile, in the US, Bitfinex a sister company to Tether is allegedly under some legal scrutiny.

Bitfinex is a crypto exchange owned and operated by iFinex. According to the statement given by the  Department of Justice (DOJ)  to a Freedom of Information Act (FOIA) request, the company is currently under criminal investigation in the US.

Allegedly, the request  asked for information pertaining to Tether Holdings Limited, its parent company iFinex Inc. and its subsidiaries, but this was denied by the Department of Justice (DOJ) on the defence that “production of such law enforcement records or information … could reasonably be expected to interfere with enforcement proceedings.”

Before now, Tether and Bitfinex have been investigated severally by both civil and criminal organisations. Both entities paid a total fine of USD 42.5m to the US Commodity Futures Trading Commission (CFTC) in 2021