This acquisition deal seems to be part of the Facebook’s launch of Places Services.

Hot Potato said:

We’re thrilled to announce that some of the features and thinking behind Hot Potato are going to be exposed to a much larger audience: We’ve been acquired by Facebook.

This wasn’t an easy decision, especially since we’ve built up a base of dedicated users. If Hot Potato was going to sell to anyone, Facebook was the natural choice. Facebook is still small, moves fast, provides a great supportive environment for people to be entrepreneurial, and most importantly, Facebook builds great products. We’re looking forward to joining their team.

Hot Potato is not signing up any new users. Existing users are being advised to download their stored information.  The service would shut down in around a month. Facebook would not store any of the existing user information.