Ledger halts recovery service, Web3 in Hong Kong, and another CEX goes down

Another centralized exchange (CEX) bites the dust, with Hotbit announcing it will close operations due to adverse business conditions. As is common among CEX collapses in recent months, the crypto firm mentioned FTX, the ongoing banking system crisis, and even a probe, as reasons for its cash flow problems.

Also facing a tough time is wallet provider Ledger. The company decided to postpone its controversial recovery service amid community backlash. Security reputation is critical for a crypto wallet provider, but Ledger’s dilemma may be beyond a public relations crisis. The recovery service was also a path toward subscription services, which could generate recurring revenue for the wallet provider. The feature is now postponed until most of its code is open-sourced, said Ledger.

In challenging times, there are also opportunities for others. Honk Kong is advancing its plans to become a crypto hub, with over 150 crypto firms waiting for approval to operate as virtual assets trading platforms in the city.

This week’s Crypto Biz explores Hotbit’s closure, Hong Kong’s licensing of crypto firms, Bitstamp’s acquisition by Ripple and Ledger’s branding crisis.

Hotbit exchange halts operations, urges users to withdraw funds

Crypto exchange Hotbit is winding down operations, urging users to withdraw funds by June 21. According to an announcement, Hotbit’s operations have deteriorated since an investigation of a former team member took place in August 2022. Authorities believe a former management employee was involved in a project that violated criminal laws. The probe forced the exchange to halt business for weeks. Hotbit’s cash flow was also impacted by the FTX collapse and the banking crisis — incidents that resulted in a continuous outflow of funds from centralized exchanges, said the firm. The announcement was followed by phishing links pretending to be the official Hotbit website on Google. 

Ledger key recovery service paused amid backlash, will open-source code

Ledger’s public relations nightmare took a new turn this week, leading the company to pause its recovery service tool amid ongoing community backlash. Disclosed on May 16, the Ledger Recover feature would allow users that lost their private seed phrase to get it back via an optional function. Earlier in the week, Ledger’s CEO Pascal Gauthier confirmed that private seed phrases of users using the service could, in theory, be handed over to governments if they were to be subpoenaed….