China-based crypto exchange Hotbit has
suspended withdrawals after its assets were frozen due to an ongoing
investigation. Meanwhile, Tether's sister company Bitfinex is
ostensibly facing legal investigation in the US.
Hotbit announced Wednesday
that it has suspended trading, deposit, withdrawal, and funding functions due
to an ongoing investigation into a former employee.
"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 exchange explained.
The exchange said that a number of its
senior managers have been subpoenaed by law enforcement, without identifying
the jurisdiction. It added that "law enforcement has frozen some funds of
Hotbit, which has prevented Hotbit from running normally."
According to its website,
Hotbit is registered in Hong Kong and Estonia, with most of its staff hailing
from China, Taiwan, and the US.
In another update,
the exchange said all users' unfilled open orders will be canceled in order to
prevent losses. It will also liquidate all users' leveraged exchange-traded
fund (ETF)
positions and will publish a compensation plan for users once it resumes
operations.
Meanwhile, Bitfinex, a cryptocurrency
exchange owned and operated by iFinex,
which also owns USDT issuer
Tether, is apparently facing a criminal investigation in the US, according to a Department of Justice (DOJ) reply to a
Freedom of Information Act (FOIA) request.
The request, which asked for
information pertaining to Tether Holdings Limited, its parent company iFinex
Inc. and its subsidiaries, was denied by the DOJ on the basis that
"production of such law enforcement records or information ... could
reasonably be expected to interfere with enforcement proceedings."
"Looks like Bitfinex is in legal
proceedings in the US - the DOJ denied my FOIA request," said Twitter user
oleh86, who claims to have filed the FOIA request.
Bitfinex and Tether have faced several investigations from
criminal and civil entities. In late 2021, the US Commodity
Futures Trading Commission (CFTC) ordered the two to pay fines totaling USD 42.5m.
Source: cryptonews.com