Author: Ma He, Foresight News
On July 6th, the exchange AscendEX officially confirmed its cessation of operations. The platform's official website released a letter to users on July 6th, clarifying that all business operations will cease from July 1st, 2026, due to the full implementation of the EU's Crypto-Asset Market Regulation (MiCA) and multiple factors including market conditions, finances, and operations. Users are no longer able to open accounts, deposit funds, trade, exchange, stake, lend, or participate in any activities; accounts will only retain limited exit purposes.
Following the announcement, on-chain investigator ZachXBT immediately responded, pointing out that AscendEX's public hot wallet currently lacks sufficient liquidity to process several verified seven-figure (millions of dollars) withdrawal requests from users. In the preceding weeks, ZachXBT had repeatedly warned of withdrawal delays on the platform and, through analysis of its hot wallet data using tools such as Arkham Intelligence and TRM Labs, discovered a severe shortage of highly liquid assets (such as ETH, USDT, and SOL). ZachXBT explicitly advised the community not to deposit funds into the CEX and demanded a response from the platform regarding withdrawal delays and hot wallet liquidity issues. AscendEX announced that, "Starting July 6, 2026, all withdrawal requests will be subject to manual review before processing, and automatic withdrawals are currently suspended. Withdrawals may be delayed, may require additional information, or may not be processed while the review continues. We cannot currently guarantee processing time or amount. No account holders or groups of account holders are given priority except for the documented review process." The author found through Arkham blockchain analysis that the wallet address currently has very little funds available for withdrawal. In the past two days, apart from withdrawals of tens of thousands of US dollars in BTC, all other withdrawals were small amounts, and these occurred a week ago. As of now, one of the marked wallets only holds $13.46 million worth of altcoins. It's worth noting that the exchange originally hoped to attract liquidity through strategic mergers or restructuring, but ultimately failed. To date, there have been no new official updates releasing further repayment plans or financial details. The predecessor of BitMax, according to the AscendEX official website, was BitMax.io, which officially launched in August 2018. The co-founder and CEO was Cao Jing, and the COO was Ariel Ling. Cao Jing has a background in quantitative trading and venture capital, and has built quantitative platforms in the financial market; Ariel Ling previously worked at Deutsche Bank and Barclays. Between 2019 and 2020, BitMax rapidly rose during the crypto bull market. In March 2021, the platform was renamed AscendEX and completed a $50 million Series B funding round led by Polychain Capital and Hack VC. However, in December 2021, a major security incident shattered the stability. Attackers exploited a vulnerability in AscendEX's hot wallet to steal approximately $77.7 million in assets across Ethereum, BNB Chain, Polygon, and other chains (estimated by PeckShield and other institutions at approximately $80 million). The platform quickly confirmed the unauthorized transactions and promised to compensate users for their losses with its own funds. This incident became one of several exchange hacks that year, exposing the inherent risks of hot wallets in daily liquidity management. AscendEX continued to operate afterward, but the industry environment had undergone profound changes. Stricter global regulations, intensified competition, and cyclical fluctuations in the crypto market gradually accumulated pressure. By mid-2026, the problems had reached a breaking point. Exchanges Undergo Cleanup
ZachXBT, as an independent on-chain detective, relies on publicly available blockchain data and professional tools (such as Arkham and TRM) for his methodology, rather than insider information or rumors. This makes his warnings highly verifiable.
In the AscendEX incident, he pointed out the liquidity risk several days in advance and continued to track the status of hot wallets after the platform's announcement, emphasizing "multiple verified seven-figure withdrawal requests from users."
In community discussions, some voices mentioned that AscendEX was once described as a "mom-and-pop shop" (George Cao was married to someone involved in finance). This incident once again highlights the inherent risks of centralized exchanges: even without hacking attacks, imbalanced liquidity management, lagging regulatory compliance, and the pressure of a severe bear market can all trigger a run on the exchange. The hot wallet theft in 2021 and the liquidity shortage in 2026 echo each other—hot wallets, designed for daily operations, often become the focus of both liquidity and security pressures. Furthermore, the exchange's attempt to blame regulatory action for ceasing operations has been met with considerable skepticism. AscendEX has never obtained any compliance authorization from the EU, and whether MiCA takes effect or not has no impact on its original operating model. It's merely using the industry trend of compliance implementation as a convenient, unavoidable excuse for its demise. Following the rapid growth of DeFi in 2020-2021, some cryptocurrency exchanges have undergone a major shake-up. For the industry, small and medium-sized platforms face pressure to exit or restructure, while platforms with transparent reserve certificates, strong regulatory licenses, and robust risk control are more resilient. For users, storing cryptocurrency assets in non-custodial wallets or on exchanges that disclose transparent reserves is perhaps the best way to mitigate risk.
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