BitMart custody doubts grow as BMX drops 63% in wind-down

BitMart has not published a proof-of-reserves report as of Aug. 12, leaving customers unable to verify asset coverage during its wind-down.

"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," Himanshu Sahay, co-founder and CTO at Arch Lending, said.

OpenGradient co-founder Matthew Wang alleged on Aug. 10 that his project's market-making team could not withdraw balances held on BitMart. Scandic Coin separately said withdrawal requests covering about 21,898 USDT, 926,635 SNC and another 256 USDT remained unprocessed after being submitted July 26.

Trading ends at 01:00 UTC on Aug. 26, ahead of the platform's planned closure Jan. 31, 2027. Founder Sheldon Xia denied on Aug. 8 that BitMart misappropriated customer assets, but the exchange has not disclosed independently verified reserves and liabilities.

Withdrawal complaints add pressure 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. He did not disclose the amount or composition of the assets held by the market maker, and his insolvency accusation has not been independently verified.

Scandic Coin 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. For customers, the absence of a transaction hash means there is no on-chain evidence showing that their assets have left the exchange.

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," he said.

According to Sahay, companies cannot obtain the full benefit of asset segregation by adopting it after withdrawals stall. 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 usually cover a specific point in time and may exclude certain assets or obligations, while customers need a way to confirm their individual balances were included in the review.

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 episode 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. For BitMart, the absence of a published reserve report means customers must rely on the same company processing their withdrawal requests for information about its financial condition.

This article is for informational purposes only and does not constitute investment advice.