BitMart account issues Aug 19 reserves ultimatum, founder calls it hack

BitMart's own Chinese-language X account demanded proof of reserves and employee salaries by Aug 19, and founder Sheldon Xia called it a hack.

BitMart's Chinese X account posted a five-point ultimatum Aug 17 demanding founder Sheldon Xia disclose wallets and pay staff by Aug 19.

"We have collected full evidence of the content on X, all of which is fabricated rumors," Sheldon Xia, founder of BitMart, said in a response post the same day.

Arkham data shows wallets attributed to BitMart held about $36.5 million in crypto assets as of Aug 17, down from roughly $71 million on July 26 and $102 million on July 6. The exchange announced its wind-down on July 26, triggering a 58 percent drop in the BMX token within 24 hours. On-chain tracker Lookonchain noted only approximately 58 wallets withdrew a combined $805,000 in the first 24 hours after the announcement, including an eight-hour window with zero withdrawals processed.

The ultimatum sets an Aug 19 deadline for Xia to produce verifiable proof of reserves, an explanation for the withdrawal freeze, and an audited repayment plan. Failure to respond, the letter warns, will result in evidence being submitted to regulators, law enforcement, lawyers, and media worldwide. Trading on the platform ends Aug 26, with full operations closing Jan 31, 2027.

The open letter, posted from @BitMart_zh, demands five specific actions: verifiable evidence of where user assets are held, including public wallet addresses, total liabilities, and usable liquid reserves; an explanation of who authorized the withdrawal freeze and whether management kept accepting deposits after knowing normal processing was impossible; full disclosure of any related companies or accounts linked to Xia's partner Nancy Li that allegedly held tens of millions with batch withdrawal records; immediate payment of outstanding employee salaries; and a concrete, independently audited repayment plan with timelines and a supervision mechanism.

The letter warns that failure to respond by Aug 19 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.

Xia previously denied any misappropriation of user funds on Aug 8, stating the platform would not abandon its obligations and was considering independent third-party auditors. He also said employees were not being prioritized over customers in the handling of assets.

On-chain investigator ZachXBT challenged Xia's response directly: "If you actually have the liquidity then simply return the funds to everyone instead of posting vague statements?" he wrote.

The crisis follows BitMart's December 2021 security breach, when 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, and Xia promised compensation from company funds.

Wind-Down Timeline and Withdrawal Bottlenecks

BitMart announced the phased cessation of its trading platform on July 26, 2026. New registrations, deposits, and order placements were halted that day. Spot and futures trading end Aug 26 at 01:00 UTC, with a recommended cutoff for withdrawal requests of 05:00 UTC the same day. Full platform operations conclude Jan 31, 2027.

Despite official assurances that withdrawals remain open, users have reported prolonged delays, manual compliance reviews, and blocked requests. Some large holders and market-making teams have described assets ranging from tens of thousands to millions of dollars remaining inaccessible.

For investors, this episode reinforces that 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. Holders with balances on BitMart face deep execution and recovery uncertainty.

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