Image Credit: AscendEX
Key Takeaways
- AscendEX shut down on July 1 after missing the EU’s MiCA licensing deadline, moving all withdrawals to manual review with no timing or payout guarantees.
- ZachXBT flagged near-empty hot wallets weeks before the shutdown, and reserves reportedly fell by more than $240 million on June 20.
- AscendEX cited a failed liquidity deal alongside the MiCA miss and warned that a formal insolvency process could follow.
AscendEX ceased operations on July 1 after failing to secure authorization under the European Union’s Markets in Crypto-Assets Regulation. The exchange confirmed the shutdown in a customer notice five days later, saying all withdrawals now require manual review with no guarantee on timing or amounts. Blockchain investigator ZachXBT had warned weeks earlier that the exchange’s known hot wallets held almost none of the major assets needed to cover customer balances.
Withdrawals Move to Manual Review
AscendEX said automated withdrawals were paused as of July 6. Every request now goes through manual checks covering account verification, KYC and anti-money-laundering screening, fraud prevention, asset and balance reconciliation, and network availability, along with any applicable legal or insolvency requirements.
The exchange said it cannot commit to a processing timeline or a specific payout amount.
Company notice:
“We are not in a position to give assurances about timing or amounts today. No account holder or group of account holders is given priority outside the documented review process.”
Account access has been limited to offboarding functions such as submitting withdrawal requests, updating KYC information, and downloading transaction history. Trading, deposits, staking and other platform services have been switched off entirely.
ZachXBT’s Warnings Preceded the Official Closure
ZachXBT raised the first public alarm on June 26, days before AscendEX confirmed the shutdown. The blockchain investigator said he had received multiple reports of AscendEX withdrawals stuck for days or weeks, with some requests never processed. Reviewing the exchange’s publicly known hot wallets, he found them carrying almost no balances of major assets, including USDT, ETH, USDC and SOL, which he said pointed to a liquidity shortfall.
Additional blockchain data, reviewed independently, indicates AscendEX’s reserves fell by more than $240 million on June 20, roughly two months after a liquidity injection of a similar size. Before that drop, reserves had held steady near $50 million.
In a follow-up post, ZachXBT said AscendEX had yet to process withdrawal claims exceeding seven figures in total and alleged the exchange kept accepting deposits even as withdrawals stalled. He urged affected users to file police reports and contact financial regulators in their home countries. AscendEX has not directly addressed the specific liquidity allegations.
AscendEX Points to a Failed Liquidity Deal and MiCA
In its notice, AscendEX linked the shutdown to two factors: the absence of a MiCA license, which became mandatory for crypto-asset service providers operating in the European Union as of July 1, and a liquidity transaction that did not close as planned.
Company notice:
“We relied on an agreed strategic transaction that was to provide liquidity to grow the platform, and the counterparty did not perform; wider crypto market conditions have added further pressure.”
The company said it is now assessing its financial position and reviewing options for account holders. It also acknowledged that a formal insolvency process could follow, which would place unresolved balances under that process rather than the current manual review. AscendEX has directed users to submit complaints through its official support channel and said it would provide updates if insolvency proceedings begin.
AscendEX’s Funding History and 2021 Hack
AscendEX launched in 2018 as BitMax before rebranding in March 2021. Later that year, the company closed a $50 million Series B round led by Polychain Capital and Hack VC.
Months after that raise, in December 2021, the exchange lost about $78 million in a hot wallet hack that blockchain security firms preliminarily attributed to the Lazarus Group, a hacking operation linked to North Korea. At the time, AscendEX said it would fully reimburse affected users. The current notice contains no similar assurance, stating instead that the exchange cannot guarantee the timing or amount of funds returned to customers.
