BitMart Founder Dismisses Audit Demands as Users Report Blocked Funds
BitMart's founder dismissed calls for independent audits and proof-of-reserves as 'fabricated rumors' while users report funds remain inaccessible ahead of the August 26 final trading day.
The founder of the shutting-down exchange called proof-of-reserves demands "fabricated rumors" while users can't move their money and a distressed-debt firm says a court process is unavoidable.
Key takeaways
- BitMart's founder (identified in the source article as Sheldon Lee; widely referred to elsewhere as Sheldon Xia) dismissed calls for an independent audit and proof-of-reserves, claiming the exchange's Chinese-language X account was hacked and its contents were "fabricated rumors."
- On-chain investigator ZachXBT challenged the response directly: if BitMart has the liquidity, return the funds; distressed-debt firm Echo Base says a court process is inevitable, signaling a creditor waterfall rather than a clean user exit.
- BitMart promised to publish proof-of-reserves in May 2026 and never did. The exchange's final trading day is August 26, 2026. Many users report withdrawals remain blocked today.
BitMart's founder dismissed demands for third-party audits and disclosure of wallets, assets, and liabilities as "fabricated rumors" on August 17, 2026, claiming the exchange's Chinese-language X account had been hacked. Users report withdrawals have been blocked since the wind-down announcement on July 26, and distressed investment firm Echo Base warns the situation cannot be resolved without court intervention.
The official wind-down announcement from BitMart's account set August 26 as the final trading day, with a recommended withdrawal deadline of August 26, 05:00 UTC, and full platform operations ending January 31, 2027. The Chinese-language account @BitMart_zh published an open letter on August 17 demanding the founder and Yi Li, named alongside the founder in the open letter, per CoinDesk, open the books to independent verification by August 19, or face evidence submission to law enforcement, regulators, and lawyers worldwide.
The Founder's Response Answered Nothing Users Actually Asked
The founder, identified by CoinDesk as Sheldon Lee (referred to as Sheldon Xia across most other coverage; the dossier flags this as an unresolved discrepancy), responded on X by calling the open letter's contents "fabricated" and promising a police report and a lawyer's letter to X demanding forensic data. He did not address when withdrawals would resume.
On unpaid employees, the founder said their claims "are not prioritized over client assets, everyone is a client, and there are no privileges." He offered no timeline and no balance sheet.
An X user named @chicha_liam cut straight to it: "No one asked you if the account was hacked or not. Answer what people have been asking you since July 26. When will users be able to withdraw their funds?" On-chain investigator ZachXBT was equally direct: "If you actually have the liquidity, then simply return the funds to everyone instead of posting vague statements."
The pattern is familiar. BitMart promised to publish proof-of-reserves in May 2026. That report never appeared.
What "DIP Financing" Actually Means for Retail Users
Roshan Dharia, CEO of distressed investment firm Echo Base, told CoinDesk via Telegram that his firm proposed a funded restructuring package for BitMart, including debtor-in-possession (DIP) financing and equity at emergence, and received no response, per CoinDesk.
"A custodial book this size can't be resolved consensually, because you can't reliably reach such a dispersed retail customer base, and every user you miss keeps a claim in full," Dharia said. "There is no version of this that ends well without going to court. The only question for the board is whether BitMart walks in with a plan and a funded sponsor, or is taken there by its own claimants."
DIP financing is bankruptcy language. It means creditors, a priority waterfall, and in practice a haircut and a wait for retail users sitting at the back of the queue. This is not a "withdraw your funds normally" scenario. The BitMEX forced liquidation lawsuit offered a preview of how these disputes play out when users try to recover funds through courts rather than through a functioning exchange.
BitMart is also not alone. AscendEX and BitMEX both shut down in July 2026, making this the third mid-tier centralized exchange closure in a single month. The structural culling of exchanges that cannot demonstrate solvency is accelerating.
What the August 19 Deadline Actually Triggers
The unidentified author of the @BitMart_zh open letter set August 19 as the response deadline. Failure to provide verifiable disclosure of wallets, assets, liabilities, and usable reserves by that date would result in evidence submission to law enforcement, regulators, lawyers, and media globally, per the post.
Whether that deadline produces an audit, a court filing, or silence will determine the shape of what comes next. If withdrawals resume at scale and BitMart publishes a cryptographically verifiable proof-of-reserves with independent auditor sign-off before August 19, the hacked-account explanation deserves reexamination. Without that, the deny-and-deflect pattern speaks for itself.
BitMart users who held funds on the exchange have no recourse right now. Users who held their own keys have no counterparty risk to worry about.
Sources
- BitMart official wind-down announcement (@BitMartExchange)
- BitMart support article: shutdown timeline and withdrawal deadlines
- @BitMart_zh open letter, August 17, 2026
- Sheldon Lee/Xia response on X and Echo Base restructuring proposal: first reported by CoinDesk
Frequently Asked Questions
The official withdrawal deadline is August 26, 2026, at 05:00 UTC, per BitMart's support article. However, multiple users report that withdrawals remain blocked as of August 17. The founder's response did not include a timeline for restoring access. Users should attempt withdrawal immediately and document any failure to do so.
Proof-of-reserves is a cryptographic attestation, typically using a Merkle-tree structure, that allows an exchange to demonstrate it holds at least as much in user assets as it owes. BitMart publicly committed to publishing a proof-of-reserves report in May 2026. It never did. That silence, combined with blocked withdrawals and the founder's deflection, is the clearest available signal about the state of the exchange's books.
If BitMart enters a formal restructuring process, as Echo Base's DIP financing proposal implies is likely, retail users become unsecured creditors. In a creditor waterfall, secured creditors and administrative claims are paid first. Retail customers typically receive cents on the dollar, after a lengthy legal process. The August 19 deadline and the absence of any response to Echo Base's proposal suggest this trajectory is already in motion.
