BitMart faces August 19 deadline after linked wallets halve – Who gets repaid?

The wind-down process for BitMart is under increasing pressure. This is after customers have claimed that their ability to withdraw money is being limited while former employees are claiming that they have yet to be paid the salary owed.

As a result, its Chinese X account has called for an independent third party to verify all users’ wallets, assets, liabilities, and reserves held at BitMart. The dispute follows last week’s withdrawal concerns, when founder Sheldon Xia denied claims that he misused customer funds.

Xia now reports that hackers accessed the Chinese account and sent out false information about him, prompting him to pursue legal action.

Withdrawals may explain part of that decline, but unresolved liabilities increase the importance of knowing what remains. Independent verification would clarify whether BitMart still holds enough assets to meet customer and employee claims as the wind-down progresses.

BitMart’s reserves draw scrutiny

That uncertainty now makes BitMart’s remaining asset coverage more important than the movement of individual withdrawals.

Prior to the operational announcement by Arkham, approximately $71 million was attributed to the exchanges’ exchange-linked wallets. As of writing, approximately $35.6 million is being attributed to these same wallets. Even though some of the decline may be from customers withdrawing their funds.

However, merely showing a decrease in wallet balance does not provide any information as to whether or not BitMart is able to pay its customer claims.

In order to determine if BitMart still has sufficient assets to meet its customer liabilities, the exchange will have to provide proof of reserves, which links identifiable assets that remain with the current customer liabilities.

Currently, there is no way for the public to know what percentage of each customer liability that BitMart can currently fund. Therefore, the ability of the exchange to properly close down will depend upon information that is unavailable through on-chain wallet balances alone.

A complete disclosure of all wallet activity by BitMart and a corresponding matching to each obligation. This would show whether falling reserves reflect orderly repayments or reveal a funding shortfall.

BitMart faces 19 August deadline