Arch Lending's CTO Himanshu Sahay has called for independently verifiable custody solutions following BitMart's withdrawal processing challenges and insolvency allegations. According to Sahay's statement to crypto.news, questions about withdrawals and exchange closures expose a structural gap across digital asset markets - the difference between platform-level statements and independent verification. Customers often have no real-time method for establishing whether an exchange holds their assets in segregated accounts, with uncertainty increasing when withdrawals slow because customers must rely on the same company processing their requests for information about its financial condition. Sahay emphasized that maintaining collateral with qualified, regulated custodians completely separate from operating balance sheets is what ensures customers never have to rely on trust alone.
BitMart is facing fresh insolvency allegations after OpenGradient co-founder Matthew reported that his market-making team cannot withdraw locked funds from the exchange. According to Matthew's claims, the team has funds trapped on BitMart and questioned whether the exchange remains solvent. He alleged that BitMart continued encouraging token holders to lock funds on the exchange about one week before halting related services, describing the timing as 'shocking' and claiming the lockup campaign may have been intended to bring additional liquidity onto the platform. The claims have not been independently verified, and Matthew did not disclose the value or type of assets held by the market maker, though they add to mounting questions about the exchange's ability to process withdrawals during its wind-down.
BitMart founder Sheldon Xia has responded to mounting speculation regarding the exchange's shutdown, denying allegations of misappropriating customer deposits or removing funds before announcing closure. According to reports from AMBCrypto, Xia claimed he did not abandon his duties in relation to the exchange and urged users to rely on verified information posted through official channels rather than unsubstantiated claims allegedly made by current or former employees. The founder's defense comes nearly three weeks after BitMart announced its shutdown, with concerns growing over delayed withdrawals and now facing additional insolvency allegations.
BitMart's withdrawal processing has shown significant improvement, with activity surging to over 200 transactions per hour starting on August 7th. As reported by AMBCrypto, this rate of processing indicates the exchange has progressed from merely reviewing its assets to actively satisfying withdrawal requests. The latest pace averages roughly 300 hourly transactions, with several periods approaching 400 transactions per hour. However, requests may undergo identity checks, source-of-funds reviews, wallet-ownership verification, sanctions screening and other security procedures, as per BitMart's official statement. The exchange has recommended that customers submit withdrawal requests before 05:00 UTC on August 26, with requests submitted later moving into a separate process that the company has yet to detail fully.
BitMart-linked holdings have declined significantly from approximately ₹8,400 crore to ₹7,100-7,400 crore, though internal movements complicate the decline. According to AMBCrypto reports, Lookonchain recorded 58 wallets withdrawing about ₹6.7 crore, including an eight-hour period with no withdrawals. Scandic Coin has also reported delayed withdrawals, with requests involving approximately 21,898 USDT, 926,635 SNC and another 256 USDT remaining unprocessed after being submitted on July 26. However, clearing customer withdrawals addresses only one side of BitMart's financial obligations, as reports of unpaid wages create competing claims against remaining assets. The exchange must balance customer repayments with employee and operating liabilities while maintaining sufficient resources for an orderly wind-down.
BitMart has not published a full proof-of-reserves report, despite promising in May to prepare such disclosures after earlier withdrawal complaints. Proof-of-reserves disclosures can help verify that exchanges control assets corresponding to customer balances, though they do not establish solvency unless users can also assess the company's liabilities and off-chain obligations. The exchange has not disclosed total outstanding liabilities, making the scale of progress difficult to measure. As reported by AMBCrypto, Xia's consideration of court involvement and independent third-party auditors becomes important for verifying asset disclosures and improving withdrawal throughput. BitMart plans to terminate its trading-platform operations on January 31, 2027, though the insolvency allegation remains unproven while reports of frozen funds continue to test the exchange's claims that its wind-down is orderly.
