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BitMart appointed Alvarez & Marsal as its financial adviser on Sept. 9 as the crypto exchange reviews its financial position, withdrawal restrictions and possible paths following the suspension of trading.

Summary

BitMart appointed A&M to assess finances, stakeholder claims and withdrawal arrangements with its legal advisers. Five business days is BitMart’s deadline to publish a dedicated user feedback portal online publicly. BitMart expects to announce its action plan and consultation details within three weeks of Wednesday. BitMart halted trading on August 26 after announcing an orderly platform wind-down in July 2026. No audited asset balance, creditor recovery rate or withdrawal timetable accompanied the advisory appointment announcement. The exchange said A&M would work alongside its legal advisers to assess its finances, stakeholder matters and arrangements for an “orderly withdrawal” process. BitMart also said it would examine a potential phased business restart and proposals from unidentified third parties.

The appointment does not reverse BitMart’s trading halt or provide users with a confirmed repayment schedule. The exchange has not published independently verified asset and liability figures, customer shortfall estimates or expected recovery rates.

BitMart gives itself three weeks to produce an action plan BitMart said it would progressively announce its proposed action plan, user consultation process and feedback mechanisms during the next three weeks. That timetable points to further information by approximately the end of September, although the company did not provide a specific date.

Update on the Appointment of Alvarez & Marsal as Financial Adviser and Near-Term Action Plan

Dear BitMart Users,

Following careful consideration, BitMart has appointed Alvarez & Marsal ("A&M") as its external financial adviser. A&M will assist BitMart and its legal advisers in…

— BitMart (@BitMartExchange) September 9, 2026 The exchange plans to establish a dedicated website through which users can submit opinions about withdrawals and BitMart’s future direction. It promised to publish the link within five business days of the Sept. 9 announcement.

A&M will review BitMart’s current operations and asset position before the exchange releases related financial information. BitMart said independent review was needed to ensure that future disclosures were accurate.

However, the announcement did not specify what records A&M would examine, whether its findings would be published in full or whether users would receive an independently audited balance sheet. A search of A&M’s public website did not identify a separate statement confirming the engagement at the time of reporting.

Withdrawal arrangements remain unresolved BitMart acknowledged that users had faced withdrawal restrictions and resulting uncertainty. It said withdrawal arrangements, asset status and future procedures were among the matters now being reviewed.

The exchange did not say how many users remain unable to withdraw, which assets are affected or how much customer property is awaiting release. It also did not provide a date for clearing pending withdrawal requests.

BitMart said it would appoint another independent third party to oversee operations and asset custody during the review. The company did not identify that party or explain its authority over wallets, private keys and transaction approvals.

This leaves several central questions unanswered. Users still lack verified figures showing BitMart’s available assets against customer liabilities. No court-supervised restructuring, bankruptcy petition or regulator-led creditor process has been announced publicly.

Claims on social media that assets are missing or that every withdrawal has failed remain unverified. BitMart’s own acknowledgement of withdrawal restrictions confirms an operational problem, but it does not establish the size or cause of any potential shortfall.

BitMart had already halted trading during its wind-down BitMart announced an orderly wind-down on July 26, citing its operating conditions, market environment and future strategy. The original notice scheduled the end of spot, futures and other trading services for Aug. 26.

The exchange initially planned to complete the wider platform closure by Jan. 31, 2027. It encouraged users to close positions, complete identity checks and submit withdrawals as early as possible.

BitMart later began considering a restructuring that could combine creditor distributions with a phased restart. It appointed White & Case as restructuring counsel and promised an update by Sept. 9.

As crypto.news previously reported, the exchange was evaluating creditor distributions and a phased operational restart without disclosing reserve figures, creditor eligibility rules or payout percentages. The A&M appointment satisfies the promised update but does not answer those financial questions.

The company’s support pages and main website remain online. Some promotional product pages also remain visible, but their presence does not establish that centralized trading services have resumed.

A business restart remains only one possible outcome BitMart said it would explore “various feasible follow-up actions.” Those options include a possible orderly restart and third-party proposals, but the exchange did not identify potential investors, buyers or financing providers.

The company also did not commit to reopening. Any restart would depend on the financial review, available assets, legal advice and negotiations with affected stakeholders.

User feedback may influence the assessment, according to BitMart. However, the feedback portal is a consultation channel rather than a formal creditor vote or legally binding claims process.

The next confirmed deadline is the publication of that portal within five business days. Users should then expect additional action-plan details within three weeks. The most consequential disclosures will be independently verified asset and liability figures, the status of pending withdrawals and the identity of the proposed custody supervisor.

Until those disclosures appear, BitMart’s financial condition and users’ expected recoveries remain unknown.

3 hours ago

On-chain detective ZachXBT has issued a community alert, reporting that over the past three days, multiple verified WOO X users have complained their withdrawals remain stuck in "pending" or "processing" status. As of the time of his post, WOO X has not released a statement on the matter. WOO X was incubated by Kronos Research and acquired by FusionX Digital in the fourth quarter of 2025. ZachXBT pointed out that FusionX Digital is reportedly linked to BitMart founder Sheldon Xia. ZachXBT also noted that BitMart announced on July 26, 2026, it would cease operations and restructure, leaving users unable to access millions of dollars in trapped funds, with complaints rising steadily on the X platform. Sheldon Xia only issued a vague statement asserting user assets are secure, but these claims have not been independently verified.

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Echo Base formed an ad hoc committee of BitMart claimholders on Sept. 2, following the crypto exchange’s decision to wind down its operations.

Summary

Echo Base formed an ad hoc committee representing BitMart customers with assets frozen after shutdown. Echo Base says BitMart never answered its proposed $10 million restructuring commitment submitted August 6. The committee retained two law firms and is assessing bankruptcy, regulatory and other recovery options. No court has determined whether customers retain ownership rights over assets held through BitMart accounts. BitMart appointed restructuring counsel and promised users a detailed roadmap by September 9, 2026 publicly. In a statement shared directly with crypto.news, Echo Base said the committee represents a “significant and growing aggregate balance” of frozen customer assets. It did not disclose the number of participating claimholders or the value of their claims.

The special situations firm said the group retained Young Conaway Stargatt & Taylor and Ashbury Legal. The committee is considering restructuring, regulatory and insolvency remedies.

Echo Base says its $10 million offer went unanswered Echo Base said it submitted a written proposal to BitMart management on Aug. 6. The proposal offered up to $10 million to sponsor a pre-negotiated bankruptcy filing.

According to the statement, the money would cover professional and administrative expenses through confirmation of a restructuring plan. Echo Base said BitMart did not respond. Crypto.news could not independently verify the communications between the companies.

Echo Base also described a dispute involving one of its affiliates. It said the affiliate requested a withdrawal on July 24, approximately 31 hours before BitMart announced its closure.

The affiliate allegedly made 15 attempts to contact the exchange before delivering a formal demand on Aug. 8. Echo Base said BitMart neither executed the withdrawal nor identified a contractual or legal reason for withholding the assets. BitMart has not publicly addressed that specific account.

BitMart is considering a different restructuring plan BitMart announced its orderly wind-down on July 26. It suspended new registrations, deposits and new orders before ending trading services on Aug. 26.

The exchange initially said it planned to cease platform operations on Jan. 31, 2027. Withdrawals would remain available, although BitMart warned that compliance reviews and heavy demand could delay processing.

As crypto.news previously reported, BitMart’s shutdown sent BMX down more than 60% within 24 hours. BitMart attributed the closure to its operating conditions, the market environment and its future strategy.

However, BitMart changed course on Aug. 21. In an official update, the company said it was developing a possible restructuring plan as an alternative to a full wind-down.

That plan “may include” phased business resumptions and creditor distributions, BitMart said. The exchange appointed White & Case as restructuring counsel and promised another update by Sept. 9.

Claimholders are considering court proceedings Echo Base said the committee is studying whether qualifying creditors could commence or join an involuntary insolvency proceeding. The firm stressed that no decision had been made.

An involuntary U.S. bankruptcy petition must meet statutory requirements governing creditor eligibility, claim amounts and disputed debts. A court would ultimately decide whether any petition could proceed. The committee is an independently organized group, not a statutory creditors’ committee appointed within an existing bankruptcy case.

Echo Base also argues that BitMart’s user agreement does not transfer ownership of deposited assets to the exchange. That remains the committee’s legal position rather than a court ruling. The treatment of customer crypto would depend on the relevant contracts, entities, jurisdictions and any eventual proceeding.

“BitMart still has time to run an orderly wind-down. What it does not have is anyone willing to put capital behind one. Out of court there is no stay, so a single claimant can stall the process for everyone, and any holder the company cannot reach retains its claim indefinitely. That is not a wind-down, it is an open liability with a queue attached.” said Echo Base’s chief executive Roshan Dharia.

Dharia added that Echo Base had offered “capital at risk” to support a court-supervised process. He said the proposal had remained outstanding since Aug. 6.

The Sept. 9 roadmap is the next deadline BitMart’s promised Sept. 9 update should clarify whether it will pursue a partial reopening, creditor distributions or its original closure schedule. The exchange has not publicly accepted Echo Base’s proposal.

Echo Base said it remains willing to negotiate with BitMart and its advisers. Until an agreement or court filing emerges, the committee’s recovery options remain under review and the status of individual frozen withdrawals may differ.

BitMart Reverses Course: Exchange Now Considering Restructuring Instead of Complete Shutdown

BitMart said on Aug. 21 that it was exploring a restructuring plan involving creditor distributions and the phased restart of selected operations, less than four weeks after announcing a complete wind-down.

Summary

BitMart appointed White & Case while evaluating creditor distributions and a phased operational restart plan. September 9 is BitMart’s deadline for another update, not a guaranteed restructuring completion date yet. Existing notices still schedule all trading to end August 26 at 01:00 UTC unless revised. BitMart has not published creditor eligibility, payout percentages, reserve data or a court filing publicly. BMX trades near $0.06 after losing roughly 80% over one month, according to trackers currently. The exchange appointed White & Case as restructuring counsel. It promised another update by Sept. 9 but did not cancel its existing Aug. 26 trading cutoff or Jan. 31, 2027, closure date.

The announcement marks BitMart’s first public reference to creditors. It does not explain which customers or counterparties fall within that category.

BitMart restart remains under assessment BitMart said the proposed plan could combine an orderly resumption of certain services with distributions to creditors. Any restart remains subject to legal, financial, operational and regulatory reviews.

🚨 BREAKING: BitMart is now considering a phased restart and creditor payouts, less than four weeks after announcing plans to shut down.

The exchange has hired restructuring counsel White & Case and says a roadmap could be released by September 9.

No formal bankruptcy or… pic.twitter.com/9gIHAEusZn

— THC Humor 💹🧲 (@THChumor) August 23, 2026 “The potential plan may include the phased resumption of certain operations,” BitMart said. The company has not approved or launched that plan.

White & Case will evaluate available options with BitMart’s other advisers. The law firm’s appointment does not establish that BitMart has entered bankruptcy or another court-supervised process.

No verified bankruptcy petition, restructuring case number or creditor-claim portal had been published when this report was prepared. BitMart also has not identified the legal entity or jurisdiction that would administer distributions.

The exchange said it expects to consult its community after a business resumption plan launches. It has not explained how customers would participate or whether any creditor vote would be required.

August 26 trading deadline remains active BitMart’s closure notice still schedules all spot, futures and other trading to end at 01:00 UTC on Aug. 26.

Futures accounts have entered reduce-only mode, while spot markets stopped accepting new orders. New registrations and cryptocurrency and fiat deposits began closing on July 26.

Any futures positions remaining at the deadline may be settled using the applicable mark price, index price or platform settlement rules. BitMart said it would publish separate settlement arrangements, but the restructuring update did not provide them.

The exchange previously recommended completing verification and submitting withdrawal requests before 05:00 UTC on Aug. 26. Withdrawals officially remain available, although additional identity, sanctions, transaction-history and wallet checks may delay processing.

As crypto.news reported, the shutdown announcement sent BMX down more than 60% within the surrounding 24-hour period. The possible restructuring does not currently change the withdrawal guidance.

Creditor language raises unanswered questions BitMart did not disclose why customer or counterparty balances may require creditor distributions rather than ordinary withdrawals. Its July notice cited operating conditions, the market environment and future strategy without describing a shortfall.

The latest statement includes no balance sheet, liability total, reserve report or recovery percentage. It also does not establish whether user assets and unsecured commercial claims would receive different treatment.

Earlier concerns about BitMart’s reserves and custody position were based partly on third-party wallet tracking and customer reports. Those observations do not independently establish the exchange’s complete assets or liabilities.

Onchain balances cover only publicly identified wallets. They cannot show undisclosed addresses, fiat holdings, offchain liabilities or assets held through custodians. A reliable recovery assessment therefore requires audited financial information or verified court disclosures.

September roadmap must clarify payouts BitMart said it would “endeavour” to provide another update no later than Sept. 9. The wording commits the exchange to further communication rather than a finalized restructuring agreement.

The next announcement needs to identify which operations could restart, which legal entities owe creditors and how claims will be valued. Customers also need information about payout timing, available assets and the treatment of pending withdrawals.

Unless BitMart formally changes its schedule, trading will stop two weeks before the restructuring update. The wider platform remains scheduled to terminate at 15:59 UTC on Jan. 31, 2027.

BMX was trading near $0.061 on Aug. 23, according to CoinGecko. The token remained approximately 80% below its price one month earlier despite recovering modestly over the preceding week.

The Sept. 9 update will determine whether BitMart has a viable restart proposal or continues with its original wind-down. Until then, the phased restart and creditor distributions remain possible components rather than confirmed outcomes.

Crypto App NoOnes Shuts Down After Sanctions, Affecting 2.5M Users

Blockchain

22 August 2026 | 22:58 BitMart’s shutdown notice framed closure as a strategic response to difficult conditions. Four weeks later, its restructuring update places creditor distributions beside a possible return to business.

What changed since BitMart’s shutdown notice Then: BitMart described an orderly exit. Now: It is considering an alternative wind-down. New element: Distributions to unnamed creditor groups. Next date: A restructuring roadmap by September 9. The shutdown now has a claims question BitMart’s July announcement pointed to market and operating conditions, as well as the company’s future strategy. It read as a decision to leave an increasingly difficult exchange business.

The latest notice changes the frame. BitMart says it is working on a potential restructuring plan “as an alternative to a full wind-down,” which could pair selected operations with distributions to creditors.

That language introduces a financial question absent from the original announcement. When BitMart said it was closing, the focus was on services, deadlines and withdrawals. Its new update puts potential claims against the exchange at the centre of the next phase.

Keeping a business alive is not the same as restoring an exchange BitMart has not promised to restore the platform in its previous form. Its wording is limited to the phased resumption of “certain operations” in an orderly manner.

That distinction matters. A restructuring can preserve selected parts of a business without reopening every product, market or customer function. The notice does not identify which operations are under review, and it does not say that spot trading, futures, deposits or new registrations would return.

The story, therefore, is not that BitMart has reversed its shutdown. The exchange is testing whether part of the business can continue while a separate process addresses the claims created by the planned exit.

White & Case puts recovery before growth BitMart has hired White & Case as restructuring counsel to work alongside its other advisers. The firm will help evaluate the available options and develop a framework for any business resumption, according to BitMart’s official August 21 update.

The appointment does not reveal the size of any claims or establish how creditors would be treated. It does make clear that BitMart is dealing with more than product decisions. Any restart has to fit alongside a legal and financial plan for distributions.

BitMart has not named the creditor groups, the amount of any obligations, the source of funds for distributions or the process through which claims would be assessed. It would be wrong to assume that “creditors” refers only to users with balances on the platform.

Three answers stand between BitMart and a restart First, the roadmap needs to identify who has claims and how those claims would be handled. That is the difference between a broad reference to creditor distributions and a workable restructuring plan.

Second, BitMart needs to name the services it believes can resume. An exchange cannot regain trust through a vague promise of operations returning “in phases.” Users need to know what comes back, what stays restricted and what happens to existing accounts.

Third, the company needs to explain whether its original shutdown timetable still applies. BitMart’s latest notice sets September 9 as the date for a further update, but it does not state whether the earlier operational deadlines will change.

September 9 will show which story BitMart is telling A full wind-down has one direction: closure. BitMart’s new approach raises a harder possibility—preserving enough of the business to restart while organising distributions to the parties with claims against it.

The upcoming roadmap will show whether that is a genuine restructuring plan or simply a more controlled version of the shutdown already announced. Until then, “creditors” matters more than “resumption.”

Author

Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.

Not financial or tax advice. PANews content is strictly educational and informational and is not investment advice, financial advice, tax advice, legal advice, or a solicitation to buy or sell any digital asset, security, or financial product. Do your own research and consult qualified advisers.

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BitMart Reverses Shutdown Decision, What Changed?

BitMart Account Demands Answers Over Frozen User Funds and Unpaid Salaries

The wind-down process for BitMart is under increasing pressure. This is after customers have claimed that their ability to withdraw money is being limited while former employees are claiming that they have yet to be paid the salary owed.

As a result, its Chinese X account has called for an independent third party to verify all users’ wallets, assets, liabilities, and reserves held at BitMart. The dispute follows last week’s withdrawal concerns, when founder Sheldon Xia denied claims that he misused customer funds.

Source: X Xia now reports that hackers accessed the Chinese account and sent out false information about him, prompting him to pursue legal action.

Withdrawals may explain part of that decline, but unresolved liabilities increase the importance of knowing what remains. Independent verification would clarify whether BitMart still holds enough assets to meet customer and employee claims as the wind-down progresses.

BitMart’s reserves draw scrutiny That uncertainty now makes BitMart’s remaining asset coverage more important than the movement of individual withdrawals.

Prior to the operational announcement by Arkham, approximately $71 million was attributed to the exchanges’ exchange-linked wallets. As of writing, approximately $35.6 million is being attributed to these same wallets. Even though some of the decline may be from customers withdrawing their funds.

Source: Arkham However, merely showing a decrease in wallet balance does not provide any information as to whether or not BitMart is able to pay its customer claims.

In order to determine if BitMart still has sufficient assets to meet its customer liabilities, the exchange will have to provide proof of reserves, which links identifiable assets that remain with the current customer liabilities.

Currently, there is no way for the public to know what percentage of each customer liability that BitMart can currently fund. Therefore, the ability of the exchange to properly close down will depend upon information that is unavailable through on-chain wallet balances alone.

A complete disclosure of all wallet activity by BitMart and a corresponding matching to each obligation. This would show whether falling reserves reflect orderly repayments or reveal a funding shortfall.

A five-point ultimatum posted from BitMart’s official Chinese-language account gave Sheldon Xia two days to disclose wallets and pay staff, and he answered by promising a police report.

BitMart's Own X Account Demands Proof of Reserves by Aug. 19, Founder Calls It a Hack

Posted August 17, 2026 at 5:45 pm EST.

BitMart’s Chinese-language X account published a five-point open letter on Monday demanding that founder Sheldon Xia and a woman the letter identifies as his partner, Nancy Li, account for customer funds by August 19, disclose the exchange’s wallets, assets, liabilities and usable reserves, and pay employees their outstanding wages. Xia answered within hours in a post on X, written in Chinese, that the claims were “fabricated rumors.”

The letter, written in the name of BitMart users and employees, said many customers still cannot withdraw and that staff have not received their final month’s salary or the compensation they are owed. It asked who ordered the withdrawal restrictions, when management first knew the platform could not process them normally, and whether the company kept encouraging deposits after that point. It also asked for a repayment plan setting out remaining assets, total liabilities, a recovery percentage, a payout order, start and finish dates, and acceptance of an independent audit.

Xia said he would “file a police report and send a lawyer’s letter to X, demanding technical and data forensics.” “Employee assets are not prioritized over client assets,” he wrote in the same post. He later added in a post that “this Chinese official account has been hacked and is not posted by the current employee.”

Nine Days Until Trading Stops BitMart said on July 26 that it would wind down after nine years, and began phasing out new registrations and deposits the same day. Trading ends at 01:00 UTC on August 26, withdrawal requests are due four hours later, and the platform closes for good on January 31, 2027. The company said in its notice that certain withdrawal requests “may be subject to further review in accordance with applicable laws and regulations.”

An Arkham-labeled BitMart wallet has seen balances sliding toward $36 million from about $70 million since that announcement.

An Earlier Denial Xia posted in Chinese on X on August 8 that “We have not misappropriated any assets,” said the core team was taking inventory of what remained, and said BitMart was considering bringing in courts and independent third-party auditors to produce a transparent report. No wallet addresses, reserve figures or repayment timeline have followed.

The exchange lost roughly $196 million to a hot wallet breach in December 2021. On-chain investigator ZachXBT publicly challenged Xia to act rather than post: “If you actually have the liquidity then simply return the funds to everyone instead of posting vague statements?”

Related Listen: Why the AI Business Model Is Cracking and How Crypto Could Help Fix It

AI-assisted content: This article was produced with the assistance of AI tools and was reviewed, edited, and fact-checked by a member of the Unchained editorial team before publication.

COINTELEGRAPH: 'Fabricated rumors' about BitMart founder, Binance bStocks dominate: Asia Express

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BitMart founder Sheldon Xia says he plans to involve law enforcement and pursue data forensics after employees confronted management over unpaid salaries. The move marks a sharp escalation in what has become an increasingly messy shutdown of the centralized crypto exchange, which announced its wind-down on July 26.

BitMart’s closure was never going to be smooth. The Cayman Islands-registered exchange halted new user registrations immediately when it announced the shutdown, with spot and futures trading set to end by August 26 and full operations winding down by January 31, 2027.

But the timeline has been overshadowed by a cascade of complaints. Users have reported delayed withdrawals. Former employees say they can’t access funds or collect unpaid wages. A Hungarian firm has lodged a police complaint over roughly $80,000 in frozen assets.

On August 8, Xia publicly denied any misappropriation of funds, stating that his core team is conducting an asset inventory and processing withdrawal requests. The denial came amid growing online chatter questioning whether BitMart has the assets to make users whole.

BitMart’s credibility problems didn’t start with this shutdown. The exchange suffered a devastating security breach in December 2021, losing an estimated $150 million to $196 million from its hot wallets. At the time, Xia committed to compensating affected users, a promise that helped the platform survive but left lingering questions about its financial health.

Founded by Xia in 2017 and operational since 2018, BitMart positioned itself as a mid-tier exchange catering to a global audience, particularly among smaller altcoin traders looking for listings that larger platforms wouldn’t touch.

The decision to escalate the employee salary dispute to police is unusual. In most corporate wind-downs, unpaid wages are a liability the company acknowledges and negotiates. Threatening to report your own employees to law enforcement for raising the issue suggests either that Xia believes the claims are fraudulent, or that he’s attempting to control the narrative during a period of intense scrutiny.

The forensics angle likely means examining internal communications, access logs, and potentially blockchain transaction records to determine whether employees made claims that don’t match the company’s records.

The January 2027 final closure date gives BitMart roughly six months to sort through its obligations. In that time, Xia will need to process outstanding withdrawals, resolve employee disputes, and address frozen funds complaints from external parties. The $80,000 Hungarian complaint alone could trigger jurisdictional complications that extend well beyond the planned shutdown timeline.

For the over 300 users per hour still submitting withdrawal requests, none of Xia’s legal maneuvering against employees changes the fundamental question: is their money still there, and will they get it back before the lights go out for good.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.

7 hours ago

BitMart founder Sheldon posted a statement noting that BitMart’s Chinese official account has been hacked, and the content posted there was not published by current employees.

Source

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BitMart employees have taken control of the exchange’s Chinese official X account to publicly confront founder Sheldon Xia.

They are demanding transparent answers on the BitMart withdrawal freeze, unpaid salaries, and the fate of locked user funds by August 19, 2026, or they will escalate to regulators and law enforcement worldwide.

From Orderly Wind-Down to Open Revolt: What Triggered the Ultimatum The crisis began on July 26, 2026, when BitMart announced a cessation of its trading platform. New registrations, deposits, and order placements were suspended immediately.

All spot and futures trading was set to end on August 26, 2026. Full platform operations would close on January 31, 2027. The native BMX token dropped roughly 58% within 24 hours of that announcement.

Users quickly discovered the BitMart withdrawal freeze was far worse than disclosed. Requests sat in pending status or showed as completed with no on-chain hash.

On-chain tracker Lookonchain noted only approximately 58 wallets withdrew a combined $805,000 in the first 24 hours after the announcement.

That figure included an 8-hour window with zero withdrawals processed. Projects such as OpenGradient and Scandic Coin went public with reports of stuck balances and unprocessed requests.

This is not the first time trust in BitMart has been tested. In December 2021, hackers exploited a stolen private key to drain approximately $196 million from the exchange’s Ethereum and Binance Smart Chain hot wallets.

PeckShield first flagged those outflows. CEO Sheldon Xia confirmed the breach and promised compensation from company funds.

The BitMart withdrawal freeze of 2026 revives the same fundamental question: can users trust the platform’s word on fund safety?

On August 8, Xia broke his silence, insisting the platform had not and would not run away, and that assets were being inventoried.

He mentioned the possibility of independent auditors but offered no proof of reserves, concrete figures, or repayment timeline.

Separately, global CEO Nathan Chow stated he was terminated around July 24 and learned of the wind-down publicly, claiming no role in the decision.

The compliance pressure mounting on exchanges at this period extends beyond BitMart. As Bitget Restricts HTX, EXMO and Other Entities Amid Sanctions Crackdown.

Mid-tier platforms facing operational stress are now under sharper regulatory scrutiny across the industry. Investor confidence in unaudited platforms is eroding quickly.

Five-Point Demand and What It Means for BitMart Holders On August 17, the BitMart Chinese official account (@BitMart_zh) published an open letter directly addressing Xia and his partner Nancy Li.

The letter appeared in English shortly after in the same thread. It states that ordinary users still cannot access their funds and many employees have not received final pay.

The situation, the letter argues, is not a routine commercial closure. People’s life savings and basic livelihoods are at stake.

The letter issues five specific demands with a response deadline of August 19. First, verifiable evidence of where user assets are, including public wallet addresses, total liabilities, and usable liquid reserves.

夏爾特、李伊，你們欠全球 BitMart 用戶跟員工一個交代。@sheldonbitmart @BitMartExchange

到現在還是一堆用戶領不回自己的錢，一堆員工連最後一個月的薪水、該拿的補償都沒拿到。

這不是丟一句「停止營運」就可以當作沒事的商業糾紛。

對很多普通用戶來說，鎖在 BitMart… pic.twitter.com/vhiJoyo0mh

— BitMart 币市 (@BitMart_zh) August 17, 2026

Second, a clear explanation of why the BitMart withdrawal freeze occurred, who decided it, and whether management kept accepting deposits after knowing normal processing was impossible.

Third, full disclosure of any related companies, trusts, or accounts linked to Li that allegedly held tens of millions with batch withdrawal records.

Fourth, immediate payment of outstanding employee salaries. Fifth, a concrete, independently audited repayment plan with timelines and a supervision mechanism.

The letter warns that failure to respond will result in submission of evidence and fund trails to regulators, law enforcement, lawyers, and media worldwide.

It tags @cz_binance, @justinsuntron, @brian_armstrong, @VitalikButerin, @zachxbt, and @lookonchain, among others.

For investors, this episode reinforces a lesson that has echoed since the FTX collapse in 2022. Platforms without independently audited proof of reserves covering both assets and liabilities carry real counterparty risk.

This risk is highest during wind-downs when liquid reserves matter most.

As Binance Founder CZ Notes the Mounting Reality Facing Crypto Wealth, where assets are custodied matters as much as what those assets are worth.

Holders with balances on BitMart face deep execution and recovery uncertainty. BMX remains highly speculative.

See our full comparison of crypto copy trading platforms for hands-off investing.

Key Highlights Table of Contents

BitMart confronts August 19 ultimatum as users demand financial transparency and reserve verification.

Platform staff join customer coalition demanding overdue salaries and comprehensive repayment schedules.

Exchange pressured to disclose total obligations, wallet holdings, and accessible capital reserves.

Possibility of regulatory involvement looms if BitMart fails to meet approaching disclosure deadline.

Community demands concrete reserve evidence amid platform’s ongoing closure process.

A coalition of BitMart customers and staff members has issued urgent demands for reserve verification and structured repayment strategy ahead of an August 19 cutoff date. The collective is also requesting detailed explanations regarding alleged withdrawal limitations and outstanding employee wages. These escalating demands place additional strain on BitMart during its announced platform closure.

Community Demands Independently Verified Asset Proof The formal letter calls on BitMart to publish comprehensive data including client wallet addresses, accessible capital, outstanding obligations, and deployable reserve holdings. Customers require concrete numbers demonstrating the platform’s capacity to fulfill pending withdrawal requests. They’ve specifically requested third-party validation rather than accepting unaudited company declarations.

The coalition demands the platform address reported account withdrawal complications affecting numerous clients. They’re seeking information about when executives first recognized processing challenges. Customers additionally questioned who authorized any limitations and whether incoming deposits continued following these identified issues.

BitMart previously indicated that enhanced security protocols might create withdrawal delays throughout the closure procedure. These protocols potentially encompass identity validation, device authentication, IP verification, destination screening, source of funds analysis, and sanctions compliance. Nevertheless, impacted customers contend these measures don’t address questions regarding accessible reserve balances.

Account Access Issues Emerge During Platform Wind-Down BitMart revealed its closure intentions on July 26 following nearly a decade of operation. The platform immediately suspended new account registrations, incoming deposits, and fresh trading transactions. Nevertheless, executives stated customers would retain withdrawal capabilities throughout the transition period.

The organization intends to terminate all trading functionalities by August 26. BitMart subsequently anticipates complete operational cessation by January 31, 2027. Leadership referenced operational circumstances, marketplace dynamics, and strategic realignment when justifying the closure decision.

Account access concerns emerged after certain customers documented pending withdrawal submissions and processing lags post-announcement. Additional accounts alleged that some supposedly completed transactions showed no verifiable on-chain confirmation records. These grievances amplified calls for transparent documentation proving available holdings against customer obligations.

The platform previously encountered significant financial disruption following its December 2021 security compromise. Attackers extracted approximately $196 million from vulnerable hot wallet infrastructure during that breach. Leadership subsequently committed to reimbursing impacted customers utilizing corporate capital reserves.

Coalition Seeks Structured Recovery Timeline and Staff Compensation The August 17 statement additionally demands comprehensive repayment framework addressing impacted customers. It requires BitMart to reveal remaining holdings, aggregate liabilities, and projected customer recovery percentages. The requested framework would specify payment hierarchies, execution timelines, and designated oversight authority.

Staff members voiced distinct grievances regarding outstanding wages and benefits associated with the closure. The communication alleges certain personnel haven’t received compensation owed from prior pay periods. Workers maintain that leadership should resolve these employment obligations separately from pending customer withdrawal matters.

The correspondence additionally requests examination of associated accounts and connected entities potentially managing relevant capital. It asks executives to clarify fund ownership structures, capital origins, transfer activities, and potential relationships with customer holdings. Authors emphasized independent investigation rather than accepting unsubstantiated allegations as confirmed wrongdoing.

BitMart currently faces the August 19 deadline to address these demands with substantiated documentation. The coalition requires independent audit confirmation and transparent evidence validating any repayment promises. Absent satisfactory disclosure, authors may contact regulatory bodies, law enforcement authorities, legal counsel, and press outlets.

Oliver Dale

Editor-in-Chief of Blockonomi and founder of Kooc Media, A UK-Based Online Media Company. Believer in Open-Source Software, Blockchain Technology & a Free and Fair Internet for all. His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More. Contact [email protected]

3 min read

The BitMart Chinese-language X account was hacked, according to founder Sheldon Lee. (Sebastiaan Stam/Unsplash) Summary

BitMart founder Sheldon Lee dismissed as “fabricated rumors” an X post alleging that customers cannot withdraw funds and some employees have not been paid their July salaries, saying the exchange’s Chinese-language account was hacked.Users and critics, including onchain investigator ZachXBT, are demanding that BitMart restore withdrawals or submit to independent third-party audits, as the exchange winds down operations ahead of its final trading day on Aug. 26.Distressed investment firm Echo Base said it proposed a funded restructuring package for BitMart but received no response, warning that the situation is unlikely to be resolved without a court process to address widespread customer claims.BitMart founder Sheldon Lee dismissed calls to explain why, according to a post on X, some customers of the exchange are unable to withdraw their funds and some employees were not paid their July salaries.

The post on the exchange's Chinese-language account, which Lee said had been hacked, called on him and business partner Yi Li to open the books, including wallets, assets, liabilities, and usable reserves, to independent verification. It gave Lee until Aug. 19 to respond.

Last month, BitMart said it was winding down operations and Aug. 26 would be the final trading day. Many users are reporting withdrawals remain blocked.

"To this day, a bunch of users still can't withdraw their own money, and a bunch of employees haven't even received their last month's salary or the compensation they're owed. This isn't some business dispute that can just be brushed off with a single 'ceasing operations' statement," the post said.

"Are you willing to accept independent third-party audits?"

In his response, Lee did not address the demands directly, referring instead to the alleged hacking.

"We have collected full evidence of the content on X, all of which is fabricated rumors," Lee said. "During daytime US time, we will file a police report and send a lawyer's letter to X, demanding technical and data forensics."

Regarding unpaid staff, the founder of the Cayman Islands-based crypto exchange said, employee assets "are not prioritized over client assets, everyone is a client, and there are no privileges."

An X user known as BeardStaff said their assets had been inaccessible since the July 26 announcement, and that a dedicated VIP manager removed them from Telegram the day withdrawals stalled. “Where is my $10 million?” they posted.

Another user cut straight to Lee's hacked account claim.

"No one asked you if the account was hacked or not," wrote @chicha_liam. "Answer what people have been asking you since July 26. When will users be able to withdraw their funds?"

Onchain investigator ZachXBT also pushed back. "If you actually have the liquidity, then simply return the funds to everyone instead of posting vague statements."

Roshan Dharia, CEO of distressed investment firm Echo Base, told CoinDesk via Telegram that his firm has offered BitMart a funded restructuring package including debtor-in-possession financing and equity at emergence, underwritten by Echo Base as a claimholder. He said BitMart has not responded.

"A custodial book this size can’t be resolved consensually, because you can’t reliably reach such a dispersed retail customer base, and every user you miss keeps a claim in full," Dharia said. "There is no version of this that ends well without going to court. The only question for the board is whether BitMart walks in with a plan and a funded sponsor, or is taken there by its own claimants."

If no verifiable response is received by the deadline, the unidentified poster on X said they would submit all available data, fund leads, and evidence to law enforcement, regulators, lawyers, and the media worldwide.

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BitMart chief executive Sheldon Lee dismissed accusations circulating on X as fabricated rumors on Monday, hours after a public campaign gave him until August 19 to explain where customer money went.

BitMart announced an orderly wind-down of its trading platform in July. Many users still report blocked withdrawals, and former employees say last month’s salaries remain unpaid.

Why BitMart Users Want Proof of ReservesA Chinese-language account posting as BitMart 币市 published a five-point accountability demand on Monday. It asks Lee and business partner Yi Li to disclose wallets, assets, liabilities, and usable reserves that a third party can verify.

The account also questions who ordered the withdrawal limits. Moreover, it asks when management first knew the platform could no longer process requests normally.

Strain showed up on-chain almost immediately. Ethereum withdrawals surged to a 2026 high within days of the notice, while BMX crashed 46% as the announcement landed.

The July 26 notice stopped deposits and new Bitmart registrations at once. It also switched futures accounts to reduce-only mode, which lets traders close positions but not open fresh ones.

Staff pay sits at the center of the complaint. Rank-and-file employees never decided how company funds were managed, the account argues, so they should not absorb the cost of that decision.

“Let the fund flows be traced clearly. Let users know where their money is. Let employees get back the pay they deserve.”

Legal Threats Replace a Repayment PlanLee skipped the demands point by point. Instead, he said the company had gathered evidence and would file a police report and send a lawyer’s letter to X requesting technical forensics.

Sheldon. Source: XHe added that employee assets carry no priority over client assets. Meanwhile, the reply offered no reserve figures, no liability total, and no repayment timeline.

The campaign wants a repayment plan with an order of priority, a start date, and an independent audit. So far, BitMart has published none of that.

On-chain investigator ZachXBT pushed back within minutes.

“If you actually have the liquidity then simply return the funds to everyone instead of posting vague statements?”

The official notice sets August 26 as the final trading day and the recommended cutoff for withdrawal requests. Login access runs until January 31, 2027.

BitMart is one of several venues to exit this year. Analysts read closures as a healthy reset, though staff cuts at Luno pointed to wider stress. European regulators, meanwhile, opened a custody review under MiCA after an earlier exchange collapse.

Wednesday’s deadline now sets the next test. Verifiable reserve data would answer the question quickly, while another statement without numbers likely will not.

Not financial or tax advice. PANews content is strictly educational and informational and is not investment advice, financial advice, tax advice, legal advice, or a solicitation to buy or sell any digital asset, security, or financial product. Do your own research and consult qualified advisers.

Disclosure. PANews may publish sponsored content, partner content, advertisements, affiliate links, event promotions, and market commentary involving Web3 projects, service providers, or financial products. PANews personnel, contributors, or affiliates may hold digital assets or other interests related to covered topics. See our Terms of Service.

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BitMart’s missing proof-of-reserves report and withdrawal complaints from two crypto projects have raised fresh questions about how customer assets are held during the exchange’s wind-down.

Summary

Arch Lending’s CTO called for independently verifiable custody before platforms face withdrawal pressure. OpenGradient and Scandic Coin have reported inaccessible or delayed BitMart withdrawals. BitMart has denied misusing customer funds but has not disclosed verified reserves and liabilities. Trading will stop on Aug. 26, ahead of the platform’s planned closure in January 2027. BitMart concerns expose verification problem Arch Lending co-founder and CTO Himanshu Sahay said questions about withdrawals and exchange closures expose the difference between assurances offered by a platform and financial information that customers can independently check.

“Whenever questions arise around withdrawal processing or exchange wind-downs, it points to a structural gap across digital asset markets: the difference between platform-level statements and independent verification,” Sahay said in a statement to crypto.news.

Customers often have no real-time method for establishing whether an exchange holds their assets in segregated accounts or combines them with funds used for other operations, according to the executive. Uncertainty increases when withdrawals slow because customers must rely on the same company processing their requests for information about its financial condition.

Sahay said the crypto industry already has tools that can reduce such uncertainty, including third-party custodians, reserve attestations, and strict asset segregation. Their value depends on whether customers can use them to verify solvency claims before operational problems emerge.

“This isn’t a new issue, but a recurring one that resurfaces whenever a platform faces operational stress.”

BitMart stated in May that it was preparing a proof-of-reserves report after earlier complaints about account restrictions and withdrawal access. The exchange said it would release the report once security and risk-control matters had been addressed, but it did not provide a date.

No comprehensive report had been published as of Aug. 12. BitMart has also not released independently verified data covering both its assets and liabilities, leaving outside parties unable to establish whether the exchange holds enough liquid assets to meet all customer obligations.

Withdrawal complaints add pressure on BitMart OpenGradient co-founder Matthew Wang alleged on Aug. 10 that his project’s market-making team could not withdraw balances held on BitMart. Wang accused the exchange of insolvency and questioned why it had encouraged token holders to lock assets shortly before announcing its closure.

“Our MM has our balances stuck on BitMart exchange that we can’t get out,” Wang said.

Wang did not disclose the amount or composition of the assets held by the market maker. His insolvency accusation has not been independently verified, and no confirmed evidence currently establishes that BitMart’s liabilities exceed its available assets.

Scandic Coin separately said that withdrawal requests covering approximately 21,898 USDT, 926,635 SNC, and another 256 USDT remained unprocessed after being submitted on July 26. The project stopped short of declaring BitMart insolvent and instead asked the exchange for verifiable evidence that it had enough liquidity to complete customer withdrawals.

The complaints were detailed in an Aug. 10 report on frozen withdrawals, which found that BitMart had not directly answered OpenGradient’s allegation at the time of publication.

BitMart maintains that withdrawals remain available. Under its procedures, requests may face checks involving customer identity, login devices, IP addresses, transaction history, destination wallets, and the source of funds.

Sanctions screening, Travel Rule requirements, and network conditions may also affect processing times, according to the company. BitMart warns that submitting a request does not mean the review has finished or that the transaction has been broadcast to a blockchain.

For customers, the absence of a transaction hash means there is no on-chain evidence showing that their assets have left the exchange. BitMart tells users to follow the status through their account history and avoid filing duplicate requests or support tickets.

Asset segregation must precede a crisis Sahay said regulated third-party custody can reduce dependence on statements from an exchange because customer collateral remains separate from the company’s operating balance sheet.

“Maintaining collateral with qualified, regulated custodians completely separate from operating balance sheets is what ensures customers never have to rely on trust alone.”

According to Sahay, companies cannot obtain the full benefit of asset segregation by adopting it after withdrawals stall or concerns about liquidity have already surfaced. Custody arrangements need to be built into the platform’s structure from the beginning, with evidence showing where assets reside and how they are protected.

Proof of reserves can provide a snapshot of assets controlled by a platform, but such a report does not establish solvency by itself. A complete assessment also requires information about liabilities owed to customers, lenders, market makers, and other counterparties.

Reserve reports can present other limitations because they usually cover a specific point in time and may exclude certain assets or obligations. Customers also need a way to confirm that their individual balances were included in the review, while auditors must establish that the company controls the disclosed wallets.

Comparable concerns have surfaced at other centralized exchanges. In June, on-chain investigator ZachXBT said AscendEX users had reported withdrawals pending for days or weeks and questioned whether publicly identified hot wallets contained enough large-cap assets.

The resulting AscendEX liquidity concerns could not be confirmed from labeled addresses alone because an exchange may hold funds in undisclosed cold wallets or with external custodians. The episode still showed how limited wallet visibility can prevent customers from evaluating an exchange during withdrawal pressure.

Sahay expects independently verifiable third-party custody to become a basic requirement as institutional and retail participation develops. Platforms that can show where customer assets are held and how they are separated from operating funds will be able to answer such questions with evidence rather than internal assurances, he said.

BitMart will end trading on Aug. 26 BitMart began winding down its global trading platform on July 26, citing its operating conditions, the market environment, and its future strategy. The exchange stopped accepting new registrations and began suspending cryptocurrency and fiat deposits from 01:30 UTC.

Spot markets stopped taking new orders, while futures accounts entered reduce-only mode. BitMart also began discontinuing copy trading, grid trading, API trading, and other automated services.

BMX, the exchange’s platform token, fell approximately 63% during the first 24 hours following the announcement, according to the earlier BitMart shutdown report. CoinGecko data cited at the time placed BMX near $0.164 with around $6.1 million in daily trading volume.

All spot, futures, and other trading services are scheduled to end at 01:00 UTC on Aug. 26. BitMart may settle any futures positions left open at the cutoff using the relevant mark price, index price, or settlement rules.

Customers have been asked to close trading positions, cancel pending orders, and redeem eligible balances held in Earn, staking, lending, and other products. The company recommends submitting withdrawal requests before 05:00 UTC on Aug. 26.

Requests submitted after that time will enter a separate processing procedure. BitMart said affected customers would receive instructions about additional documents and withdrawal steps through official announcements or direct account notifications.

Founder Sheldon Xia denied on Aug. 8 that BitMart had disappeared, planned to avoid its obligations, or misappropriated customer assets. Xia said the core team was conducting an asset inventory, consolidating funds, and maintaining the systems required for the closure.

The founder also said BitMart was considering court involvement and third-party auditors as part of a transparent review. He did not provide a publication date or explain whether the proposed report would cover customer liabilities alongside reserve assets.

BitMart plans to cease trading-platform operations at 15:59 UTC on Jan. 31, 2027. The exchange said customers would retain account access for a specified period afterward to review historical records and submit withdrawals under the procedures then in effect.

For U.S. residents, BitMart stopped accepting new registrations in May 2022, although the company said some older accounts could remain linked to American users. A July 23 notice instructed affected customers to close positions, cancel orders, redeem balances from earning products, and withdraw their assets by 23:59 UTC on Aug. 8.

BitMart said U.S.-linked accounts could face additional restrictions after the deadline, while pending withdrawals may require identity records, proof of address, source-of-funds documents, or evidence that the customer controls the receiving wallet.

SUMMARY

OpenGradient co-founder Matthew Wang publicly accused BitMart of insolvency after his market-making funds became inaccessible on the exchange. Wang alleges BitMart pushed high-yield staking products a week before announcing its shutdown to lock in user liquidity. On-chain data shows withdrawals above $25,000 have largely stalled, and BitMart has not published a proof-of-reserves report. Founder Sheldon Xia denies any misappropriation, blaming delays on internal asset consolidation and manual reserve checks. Matthew Wang, co-founder and CEO of decentralized AI network OpenGradient, has accused BitMart of insolvency after his firm’s market-making capital remained frozen on the exchange in the middle of its ongoing wind-down.

Wang, whose company raised $8.5 million from investors including a16z crypto, Coinbase Ventures and SV Angel, posted on X that his team could not get execution requests processed on BitMart, describing the platform as functionally insolvent rather than simply delayed. Before starting OpenGradient, Wang worked in quantitative equity options market-making at Two Sigma, a background he pointed to as the basis for his read on BitMart’s liquidity position. BitMart is the third mid-sized centralized exchange to announce a shutdown within weeks, following AscendEX and BitMEX.

Wang says BitMart marketed high-yield lockups days before closing Wang’s more pointed claim concerns timing rather than delay. He noted that roughly a week before BitMart announced its shutdown, the exchange ran an aggressive campaign promoting high-APY staking and locked savings products to both token projects and retail users. He called this a deliberate liquidity play, arguing BitMart used the promise of high yields to pull fresh capital in right before cutting off access to it entirely.

If that sequence holds up, users who moved funds into locked products in late July now cannot retrieve them at all, which would put them in a worse position than users facing standard withdrawal delays elsewhere on the platform.

Five months from first notice to full shutdown JULY 26, 2026

BitMart announces “orderly cessation” of trading. New registrations, deposits and spot orders halt immediately; futures switch to reduce-only mode.

JULY 27, 2026

Lookonchain reports only 58 wallets withdrew a combined $805,000 in over 24 hours, including an eight-hour stretch with zero processed withdrawals.

AUGUST 26, 2026

Global trading operations are scheduled to stop completely.

JANUARY 31, 2027

Final date by which all BitMart trading platform operations officially terminate.

Lookonchain data undercuts BitMart’s “orderly” framing BitMart maintains that withdrawal channels remain open, but on-chain tracking paints a different picture. Analytics group Lookonchain found that withdrawals above $25,000 have effectively stopped moving, with several projects and high-net-worth accounts reporting pending requests ranging from the millions into the tens of millions of dollars. Only 58 wallets withdrew funds in the 24 hours after BitMart’s shutdown announcement, totaling roughly $805,000. For an exchange of BitMart’s size, that is a trickle. One eight-hour window in that period saw zero withdrawals processed at all. Smaller retail withdrawals may still clear. Larger institutional and market-maker balances, including Wang’s, stay stuck.

BitMart has also not published a proof-of-reserves report during the wind-down. For an exchange facing public insolvency allegations, that absence removes the one document that could mathematically confirm client assets remain backed one-to-one, leaving the dispute to play out through screenshots, on-chain trackers and dueling public statements instead. The market has already priced in the uncertainty. BMX, BitMart’s native token, fell more than 80% over the following week, trading near $0.057 after sitting above $0.30 just days earlier.

Xia denies fleeing, points to internal reserve audit BitMart founder Sheldon Xia addressed the allegations on August 8. He stated the company has not fled and does not intend to, and asked users to disregard screenshots and leaks circulating from current or former employees, framing them as unreliable.

Xia attributed the delays to systemic maintenance and an internal asset consolidation process, describing a core team working through manual reserve inventory checks rather than any deliberate withholding of funds. He denied that customer assets had been misused or withdrawn early, and said management plans to bring in third-party auditors and, if necessary, courts to produce a transparent accounting of the exchange’s financial position.

Two accounts that cannot both be right BitMart frames the slowdown as an operational bottleneck. The company insists the shutdown remains solvent and orderly. Whether BitMart can process the backlog before its August 26 trading halt will be the clearer test. A published proof-of-reserves report, something the exchange has so far declined to produce, remains the single document that could settle the dispute without relying on competing public statements.

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8h05 ▪ 12 min read ▪ by Ghiles A.

Summarize this article with:

In 2026, more than 100 crypto projects have shut down, filed for bankruptcy, or ceased operations, according to RootData. This wave has affected exchanges, wallets, DeFi, NFTs, and some blockchains. In late July, BitMEX, BitMart, Movement Labs, and Storj Labs announced their closure or bankruptcy filings within a single week. Meanwhile, Moonbeam stopped producing blocks on July 31. The sector is therefore entering a broad and highly visible phase of consolidation.

In brief More than 100 crypto projects have shut down, filed for bankruptcy, or ceased operations in 2026, according to RootData data. Closures are affecting several segments, including exchanges, DeFi, NFTs, wallets, and some blockchains. The proliferation of general-purpose Ethereum Layer 2 solutions is now accelerating market consolidation. Hacks and liquidity shortages are further weakening projects whose treasuries consist primarily of tokens. The projects that are weathering the downturn are increasingly relying on products with real usage and sustainable revenue, rather than on their token alone. The trend is affecting several categories of players, including exchanges, wallets, DeFi lending protocols, NFT marketplaces, and Layer 1 blockchains. It is therefore not limited to a specific segment of the ecosystem. The wave is now affecting different types of projects and spreading across the entire sector. According to RootData data, more than 100 crypto projects have already shut down, ceased operations, or filed for bankruptcy in 2026.

At the end of July, four companies announced their closure or bankruptcy filing during the same week. BitMEX, BitMart, Movement Labs, and Storj Labs are among the affected players. This succession of announcements provides a concrete measure of the movement. It also shows that the difficulties now go beyond young projects still in the launch phase.

Moonbeam illustrates this evolution on the scale of an entire blockchain. This Polkadot parachain permanently ceased its activities on July 31. Users who had not transferred their assets in time are left without a solution. The contracts remain present, but the chain no longer produces blocks to allow their normal use.

This situation poses a particular question to users and developers. A project can disappear as a company without its code disappearing immediately. Smart contracts sometimes continue to function after the teams dissolve. This peculiarity distinguishes decentralized infrastructures from traditional tech companies and creates new operational risks.

Ethereum Layer 2 Enters a Consolidation Phase The Ethereum layer 2 ecosystem concentrates a significant part of this restructuring. These networks experienced rapid growth in 2023 due to technical advances. They have strongly reduced costs and facilitated the launch of new chains. Their principle is to process transactions, group them, and then send them back to Ethereum.

However, the simplification of network launches has also multiplied generalist offers. The market now includes many solutions that offer similar functions. This multiplication has reduced differentiation between some projects. The question is therefore no longer just about technology, but about a network’s ability to maintain real usage.

In a statement attributed to CoinDesk, Ben Fisch, CEO of Espresso Systems, describes this period as a consolidation of generalist layer 2 solutions.

There were far too many layer 2 solutions, which, frankly, makes no sense as a product, because there is no reason to have so many versions of the same thing. We are now in a phase of consolidating these networks, not layer 2 as a whole.

Ben Fisch, CEO of Espresso Systems. According to him, the problem does not concern all layer 2s but mainly projects that replicate a similar offering. This distinction helps understand why some infrastructures continue to develop while others cease their activities.

On his side, Orkun Mahir Kılıç, co-founder and CEO of Chainway Labs, which develops Citrea, the layer 2 Bitcoin platform, told CoinDesk that this wave of closures reflects market maturity where raising capital is more difficult and investors become more selective.

Every company has its own reasons and underlying issues to close its doors. The phenomenon we are seeing is not an inherent problem of the layer 2 ecosystem. The market and technology are maturing, investments are much slower and more cautious, and only projects with solid business models and clearly defined problems will survive.

Orkun Mahir Kılıç, co-founder and CEO of Chainway Labs In other words, investors now favor projects capable of demonstrating a viable business model and clearly identifiable utility, at the expense of more speculative initiatives.

For his part, Lorenzo Valente, research director at Ark Invest, reaffirmed his analysis of crypto market consolidation by estimating that the sector is currently going through the largest consolidation phase in its history, much deeper than previous bear markets. According to him, capital has become much more selective, and teams and exchange platforms without real real estate investment trust (REIT) resources are shutting down.

The Crypto Business Model Shows Its Limits Some disappeared projects heavily depended on their own token to finance operations. These assets were used to pay engineers, support liquidity, and finance audits. As long as their dollar value remained sufficient, this mechanism could work. However, the sharp decline of altcoins has reduced the financial visibility of many projects.

Tally provides a particularly telling example. This governance tools platform for DAOs supported more than 500 protocols, including Uniswap, Arbitrum, and ENS. It had processed over a billion dollars in payments and helped secure up to 80 billion dollars in value. Despite this activity, the platform announced its closure due to lack of a sufficiently sustainable model.

Step Finance followed a different trajectory. This Solana portfolio tracking and analysis platform had obtained funding to develop its product. In January, a phishing attack on an executive’s device allowed the theft of 261,854 SOL, about 35 million dollars. After failed funding and acquisition attempts, the platform closed in February.

Everclear shows another problem related to the business model. The cross-chain settlement protocol had reached 500 million dollars in monthly volume. Yet the cross-chain solver segment never reached sufficient commercial depth. The company had signed several partnerships, but its financial resources ran out before full implementation.

These three cases present different situations but share a common point. Product usage does not automatically guarantee sufficient revenues. Significant activity can coexist with a fragile treasury and limited funding. The market thus gives more importance to a project’s ability to generate sustainable revenues.

Hacks Increase Pressure on Fragile Projects Security adds a major constraint to this consolidation period. According to a Blockaid report, on-chain exploits caused 1.1 billion dollars in losses in the first half of 2026. This amount exceeds losses recorded for the entire year of 2025. April also set a historical record for the number of attacks according to CROWDFUND INSIDER.

Two operations accounted for a large part of the losses. Kelp DAO suffered a theft of 293 million dollars on April 18. Drift Protocol lost 285 million dollars on April 1 after a social engineering operation conducted over several months. Attackers affiliated with North Korea are said to have targeted the platform without exploiting any smart contract code line.

TRM Labs estimates that actors linked to North Korea account for 66% of hack-related losses in the first half. This proportion reached 64% in 2025, compared to less than 10% at the beginning of the decade. Increasing sophistication of operations thus raises the minimum cost needed to protect protocols. Medium-sized projects sometimes have fewer resources to absorb this pressure.

The response to attacks has also changed. Previously, some communities could mobilize their treasuries to cover losses. In 2026, these token reserves have already suffered from the bear market effects. Venture capital investments have also slowed, while liquidity remains under pressure after losses related to leverage effects in October.

This combination reduces many projects’ capacity to bounce back after an incident. A hack can then become a definitive event rather than a temporary crisis. Security, treasury, and financing access thus become closely linked. For still active teams, these constraints reinforce the importance of an economic structure capable of withstanding shocks.

“Zombie” Projects Reveal Another Risk The disappearance of a team does not necessarily mean the disappearance of a protocol. Already deployed smart contracts can continue to operate without developers maintaining them. This situation creates a category of projects sometimes described as “zombies.” Their code remains active, while the structure able to monitor or fix it no longer exists.

The Lazy Summer case shows possible consequences. In July, a flaw causing 6 million dollars in losses was directly linked to Stream Finance. This protocol had already ceased operations in November 2025. Eight months later, unresolved code related to this old infrastructure contributed to creating an attack vector.

Moonbeam exacerbates this difficulty. After the blockchain shutdown on July 31, assets still locked in some DeFi protocols deployed on the chain become inaccessible. The contracts still exist, but no team can intervene to modify their functioning. Users must therefore cope with an environment that continues to exist without an active operator.

Security researchers also highlight the limits of old audits. These documents concern specific versions of code and set periods. They thus do not guarantee protocol security after modification or team disappearance. As projects accumulate, the number of active contracts without interface or maintenance may increase.

Business Models That Resist Consolidation Crypto is evolving towards a stricter selection of business models. Projects that continue their activity have used products and revenues that do not rely solely on their own token. This evolution strengthens the importance of real usage, revenues, and the ability to sustainably finance operations. It could also accelerate sector consolidation.

Despite this wave of closures, some players still maintain solid activity. Hyperliquid surpassed one billion dollars in cumulative fees as of June 30. Its trading volume increased despite the market decline, while the platform represents 70% of the decentralized perpetual contracts market. Aave held more than 12 billion dollars in deposits in July and generated more than 100 million dollars in annualized borrowing fees.

Ether.fi also presents a more diversified model. Its debit card product linked to digital assets accounts for about half of the protocol’s revenues. Its transaction fees reached 2.72 million dollars in the second quarter of 2026. The total value locked then reached 7.8 billion dollars.

These examples reveal a common criterion among projects that continue their activity. They have used products and revenue sources that do not rely solely on their own token. Consolidation thus does not mean a general disappearance of the sector. It rather translates a stronger selection between projects capable of transforming their usage into sustainable economic activity and those that fail to do so.

In the short term, the number of closures could continue to evolve with financing conditions, liquidity, and security costs. Still active projects will have to maintain their users sustainably while ensuring sufficient revenues. Abandoned infrastructures could remain present in blockchains despite the disappearance of their teams. The future will therefore depend as much on the capacity to finance operations as on the real use of products.

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Ghiles A.

Journaliste et rédacteur web passionné par l’univers des cryptomonnaies et des technologies Web3. J’y traite les dernières tendances et actualités afin de proposer un contenu de haute qualité à un large public du secteur.