Who killed BitMart?

Author: Zhou, ChainCatcher

After the shutdown of the perpetual contract pioneer BitMEX, BitMart has also fallen.

On July 15, BitMart had just released its 2026 H1 report. This report, themed around its eighth anniversary, discussed long-termism and building for the next cycle, even listing six major development directions for the second half of the year.

Just 11 days later, BitMart announced an orderly cessation of its trading platform operations.

However, this does not mean the company will disappear immediately. The official announcement stated that trading services would continue until August 26, and the account withdrawal window would remain open until January 2027, allowing users to retrieve their assets within the timeframe.

According to MSX founder Bruce's public statement, he called for the acquisition of BitMart and claimed to have contacted them (as of the time of publication, BitMart had not responded to this). Meanwhile, platforms like Huobi HTX and Websea quickly opened channels to compete for BitMart's users and departing employees.

Company CEO Nathan Chow stated that he was only informed of his termination on July 24 and was completely unaware of the shutdown decision, learning about it through the public announcement.

The sudden shutdown, with the leader excluded from the decision-making process, has sparked considerable discussion about its "cause of death."

Do small and medium exchanges really have no way out?

The most mainstream explanation for BitMart's demise is that it was eliminated by industry competition.

Colin Wu and others pointed out that non-first-tier offshore exchanges generally cannot make money and see no hope, leading them to choose to shut down voluntarily. He even predicted that, apart from the top-tier exchanges, the rest would gradually exit the market.

Many similar judgments exist. Some observers believe that the survival space for small and medium exchanges is being severely squeezed, making a wave of closures inevitable; others bluntly state that small exchanges are destined to be abandoned by the times.

Supporting this logic is a set of structural industry changes.

First, there is a high degree of monopoly among the top players, with industry estimates suggesting that only about five large exchanges may still be profitable this year.

Second, stricter regulations have compressed offshore space, with the markets in the U.S., South Korea, and Europe tightening successively, leaving less room for offshore exchanges to maneuver. Industry insider Haotian pointed out that under the overall trend of compliance, competition among CEXs is far more brutal than imagined, with requirements for licenses, reserve proof, KYC/AML, etc., almost becoming the ticket for exchanges to survive. The previously existing zero-sum game space of "one whale falls, everything thrives" has been significantly compressed, and many shutdowns seem more like proactive exits in the face of competitive pressure.

Third, there is the impact of Binance Alpha. KOL Phyrex stated that Alpha has provided a better source for altcoins and community tokens, directly reducing the listing revenue and joint market-making profits of third- and fourth-tier exchanges. He also mentioned the migration of trading teachers—once a new platform with higher profits appears, these teachers quickly move their users.

On-chain investigator ZachXBT also pointed out that during this cycle, many Asian offshore exchanges have been imitating the betting model, which is inherently difficult to sustain. However, he pointed to the risks of the entire offshore betting model rather than specific issues with BitMart.

There are also views that TradFi and the tokenization of U.S. stocks cannot save non-top exchanges. According to KOLs like Skanda, users do not buy into CEXs offering U.S. stocks except for a few top ones. BitMart acquired licenses from multiple U.S. states but still easily fell, which serves as corroboration of this judgment.

This logic is self-consistent and explains many phenomena. If we follow this reasoning, the fate of small and medium exchanges seems to be predetermined?

It is actually difficult to make such a judgment.

In the past, exchanges competed on who could do better in ground promotion, who could achieve better viral growth, and who could offer lower rebates; this space of homogenized competition is actually shrinking. Meanwhile, a large influx of TradFi assets is continuously expanding the range of trading products.

However, what most pessimists say about TradFi not being able to save exchanges may only be half right.

Simply listing a few U.S. stock products indeed fails to create competitiveness. But combining stocks with contracts and stocks with forex to create truly differentiated products that allow investors from different backgrounds to enter the crypto market more smoothly is another concept. This, for exchanges, actually increases the possibility of competing on strength and innovation.

Haotian also mentioned that small and medium exchanges must find differentiated positioning to survive—either by deeply cultivating specific regional licenses and localized services, focusing on a specific niche product, such as TradFi assets, Perps, RWAFi, or fully embracing innovative narratives native to crypto.

If this judgment holds, the competitive dimension of the industry is shifting. The focus is moving from who offers lower rebates to who can better develop products and whose finances and governance are more transparent. The space for small and medium exchanges may not be completely blocked; only the way of survival has changed.

Returning to BitMart, it was still aggressively promoting TradFi and differentiated products before its shutdown. If there is indeed a way out for small and medium exchanges, its sudden demise makes it harder to attribute solely to competitive clearing.

II. The real problem points to internal governance

Looking at the existing public clues together, the more prominent issue lies internally.

1. Lack of transparency in decision-making

Some believe that CEOs of crypto projects are often mere spokespersons pushed to the forefront by investors, lacking real power is the norm, and there is no need to be surprised. However, in the case of BitMart, the complete concealment of a life-and-death decision like shutting down the platform from the nominal highest management, letting him learn about it from the public announcement like ordinary users, is still rare https://x.com/lugeweb3/status/2081544513898844454.

A former employee responsible for the Chinese market operations also stated that he learned about the relevant adjustments only after the announcement was released. A normally functioning organization would not operate this way; this itself is a strong signal of governance disorder.

2. Divergence between business direction and shutdown outcome

According to BitMart's H1 report, the platform not only expanded its TradFi section and IPOPrime business but also saw a 203.7% quarter-on-quarter increase in new perpetual contract trading pairs, a year-on-year growth of about 256% in asset management scale, and launched prediction market products, completing the establishment of a licensed entity in Australia.

This means that the company was still intensively investing in TradFi, perpetual contracts, and prediction markets in the first half of the year, indicating that the team had a clear judgment on the direction the industry should take, aligning with the currently validated direction. However, the company suddenly moved towards shutdown, which precisely indicates that the force behind pressing the shutdown button came from outside the business, with a significant component of top-level will.

3. Doubts about internal operational willingness

Several individuals who have interacted with or understand BitMart internally described a similar picture. Crypto insider (Skanda) mentioned that his previous neighbor was a BitMart executive, who often spoke privately about the various chaos within the platform and the absurd business decisions, leading to a loss of talent and a disconnect from the times, with the boss showing no interest in management.

Another account claiming to be a former insider (Start16Start) stated that the closure news was not surprising to him, as the platform had issues with using unachievable KPIs to cut salaries, refusing to pay deserved bonuses, and lacking integrity towards employees and partners.

There are also voices mentioning that internally, there has been a long-term preference for parachuting leaders, downgrading those who fail assessments, leading to an imbalance in power structure, with rewards preferentially tilted towards specific departments.

These statements come from personal perspectives and cannot be independently verified, serving only as indirect references. However, they collectively point in one direction: the platform's internal operational willingness is insufficient, and long-term management disorder is a problem that did not suddenly appear after the shutdown.

4. Transparency gap in withdrawal execution

This is also where market skepticism is most concentrated. After the shutdown announcement, a group of large users began to publicly defend their rights.

According to a rights protection group led by user @MINGLIbtc, dozens of affected users have registered, reporting that the total assets that cannot be withdrawn amount to millions of dollars, many of which were attracted by high interest from USDG and PYUSD stablecoin investments.

Multiple users reported that the main issue was the inability to withdraw funds. Withdrawals of USDG on both the ERC20 and Solana networks are showing as paused, and the exchange outlets for USDG/USDT and PYUSD/USDT are also unusable, with large USDT withdrawals being long stuck or returned, while the platform only sporadically releases small amounts of around 100 USDT. (Currently, the number of people and amounts in the rights protection group are unilateral statements and have not been independently verified.)

Moreover, the situations described by these users are clearly inconsistent with BitMart's previous announcements.

The shutdown announcement on July 26 explicitly stated that withdrawal services would continue and urged users to redeem investments, verify balances, and withdraw in a timely manner. However, users reported widespread withdrawal suspensions.

Earlier, on July 21, BitMart had also released an announcement about reducing trading fees for stablecoin trading pairs, moving six trading pairs including PYUSD/USDT and USDG/USDT to Class A rates, stating the intention to lower trading costs and provide a more transparent and efficient trading environment.

According to Arkham data, the balance of wallets associated with BitMart dropped from about $102 million on July 6 to about $69 million after the shutdown. Within 24 hours of the shutdown announcement, only 58 wallets completed withdrawals, totaling about $805,000.

It is common for exchanges to consolidate funds during the withdrawal period; relying solely on wallet dispatch and complaints from some users about withdrawals does not necessarily indicate misappropriation. However, the official side was simultaneously lowering fees and promising continued withdrawal access before the shutdown while leaving behind withdrawal obstacles and declining balances. These factors combined have led the market to reasonably question the transparency of this orderly withdrawal.

Conclusion

Looking back at the entire industry, second-tier exchanges have recently experienced a series of shutdowns or contractions. However, their causes of death are difficult to attribute solely to the broad clue of industry competition.

The same goes for BitMart. What truly pushed it towards shutdown seems more like internal governance disorder, a sudden shift in top-level will, and some motives that remain unclear to this day—none of which can be summarized by the word competition.

What should be questioned more is whether this industry lacks builders who genuinely prioritize products and users, and whether it lacks a level of transparency that can withstand scrutiny.

As such situations become more frequent, the fallen will not just be BitMart, but also the trust that users should have in this business.