BitMart's Proof-of-Reserves Fiasco Exposes Custody Concerns

BitMart's decision to stop trading on August 26 has raised concerns about how customer assets are held during the exchange's wind-down. The exchange, which plans to close in January 2027, has not disclosed verified reserves and liabilities.

Arch Lending co-founder and CTO Himanshu Sahay said that the difference between platform-level statements and independent verification is a structural gap across digital asset markets. Customers often have no real-time method for establishing whether an exchange holds their assets in segregated accounts or combines them with funds used for other operations.

Sahay emphasized the importance of independently verifiable third-party custody, saying that it can reduce dependence on statements from an exchange because customer collateral remains separate from the company's operating balance sheet. Proof of reserves can provide a snapshot of assets controlled by a platform, but such a report does not establish solvency by itself.

BitMart has denied misusing customer funds, but its lack of transparency has led to withdrawal complaints from two crypto projects, OpenGradient and Scandic Coin. The exchange claims that withdrawals remain available, but customers must rely on the same company processing their requests for information about its financial condition.