AscendEX Exchange Shuts Down With No Guarantee Users Will Get Their Funds Back

Thousands of AscendEX users could potentially lose the funds they have in the crypto exchange. The firm has officially shut down operations amid regulatory challenges and financial difficulties. Interestingly, the company also told its customers that it cannot guarantee that they will recover all of the assets held in their accounts.

AscendEX closure raises questions for customers

In a notice published on July 6, the firm officially confirmed that it ceased operations on July 1. The company then added that the European Union's MiCA regulation was a major reason behind the closure.

The new framework requires crypto firms operating in the EU to get proper authorization. The exchange said that it did not get the needed approval to continue operating under the new rules. The exchange joined Binance who is also winding down operations in the region.

AscendEX mentioned that the firm had also been under financial and operational pressures for some time:

As a result, the exchange said it is now reviewing its financial position and exploring what other options may be available for its customers.

Withdrawals face delays and uncertainty

AscendEX confirmed that automated withdrawals have now been suspended. The firm would review every withdrawal request before funds are released. This process could lead to a huge backlog and cause major delays.

Notably, the company said that no customer group will get any special treatment and that all requests will follow the same review process. However, it also admitted that it cannot currently provide assurances.

"We are not in a position to give assurances about timing or amounts today," the firm said. "No account holder or group of account holders is being given priority outside the documented review process."

The exchange said account access is now restricted mainly to offboarding activities as it works through pending requests.

Liquidity concerns emerged before the shutdown

The shutdown may not come as a surprise to many. Blockchain investigator ZachXBT pointed out on his page complaints from many users who have not been able to process withdrawals from their accounts. It was reported as pending for days or even weeks.

The analyst also raised liquidity questions. He said wallets linked to AscendEX appeared to hold little or no visible balances of any major coin.

He made the point that public wallet data does not always tell the full story since exchanges can also hold assets in cold storage or maintain wallets that are not publicly labeled.

Not long later, ZachXBT told users to report this change to financial regulators and law enforcement agencies in their jurisdictions. He also added that the platform continued collecting deposits while many users were waiting for their withdrawals.

Meanwhile, AscendEX said it will provide additional updates as it gains a better understanding of its financial position.

Until then, customers need to stay abreast of further updates in the hope that they will regain access to their funds.