AscendEx shutdown: Uncertainty over withdrawals as hot wallets lack funds

Crypto exchange AscendEx has announced the cessation of its operations “with effect from 1 July 2026.” In a letter dated July 6, it cited a lack of an EU Markets in Crypto-Assets Regulation (MiCA) licence, “as well as broader regulatory, financial and operational considerations affecting the platform.”

However, towards the end of the letter, AscendEx reveals that it “relied on an agreed strategic transaction… and the counterparty did not perform.”

The news comes almost two weeks after pseudonymous blockchain investigator ZachXBT voiced concerns over disruption to user withdrawals.

In a June 26 message to his Telegram channel, he noted that the exchange’s “reserves appear to lack large cap tokens such as ETH, USDT, USDT, SOL, etc indicating they likely are facing liquidity issues.”

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AscendEx-labelled addresses on blockchain data platform Arkham Intelligence hold approximately $13.5 million worth of crypto. However, the vast majority of this (over $12 million) is made up of Unbound Science’s UNITE token and the exchange’s own ASD.

Ascendex’s balance history shows a sudden drop in reserves almost a week before ZachXBT first drew attention to withdrawal issues.

The $240 million drop-off came less than two months after a liquidity injection of a similar scale, before which Ascendex reserves sat steadily around $50 million.

Read more: ZachXBT slams Bitget execs over suspicious $480M withdrawals

Since June 20, the value of reserves has been much more volatile, until July 1 when the exchange ceased operations.

Following up on his original message, on July 2 ZachXBT warned that withdrawals were “still not being processed while deposits are being accepted,” and urged affected users to contact their local authorities.

He then reiterated the earlier recommendation to contact law enforcement and “hold [AscendEx’s] co-founder… responsible” on July 8.

Will AscendEx honour withdrawals?

Addressing the worries over stuck funds, AscendEx’s announcement states that “automated withdrawals are paused.”

From July 6 onward, all withdrawals will face “manual review” based on “account verification, KYC/AML/CFT and sanctions checks, fraud-prevention checks, asset and balance reconciliation, network availability and any applicable legal or insolvency-related requirements.”

Unsurprisingly, given the lengthy list of checks, it warns that withdrawals may face delays, requests for additional information, or may not be processed at all.

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