Crypto exchange AscendEX has ceased operations and frozen withdrawals, citing its failure to secure a license under the EU's new MiCA regulation and a collapsed liquidity deal. The shutdown, which leaves user funds in limbo, occurred just as European regulators launched a review of crypto custody practices, making AscendEX a live test case for the risks MiCA aims to prevent. An investigator had previously warned the exchange's wallets lacked liquid assets.
ESMA custody review
- ▪ESMA's review will assess risks including governance, key management, and smart contract vulnerabilities from late 2026 into early 2027
- ▪The European Securities and Markets Authority (ESMA) launched a supervisory review of licensed crypto firms' custody practices on July 8, 2026
AscendEX collapse
- ▪Crypto exchange AscendEX ceased operations effective July 1, 2026
- ▪On June 26, investigator ZachXBT reported AscendEX's hot wallets appeared to lack large-cap tokens like ETH, USDT, and SOL
- ▪The company said a counterparty in an "agreed strategic transaction" intended to provide liquidity "did not perform."
- ▪AscendEX placed all withdrawal requests under manual review starting July 6, 2026, pausing automated withdrawals
- ▪The exchange cited the EU's MiCA regulation, a failed strategic transaction, and market conditions for its shutdown
- ▪AscendEX announced it is "not in a position to give assurances about timing or amounts" for withdrawals and warned a formal insolvency process could follow
MiCA licensing shakeout
- ▪The AscendEX collapse provides regulators a live example of the costs of failed crypto custody for users
- ▪AscendEX stated it holds no authorization under the EU's Markets in Crypto-Assets Regulation (MiCA), which took full effect on July 1, 2026
- ▪Major exchanges Binance and Bybit adjusted operations due to MiCA, with Binance leaving the EU and Bybit restricting European users
Custody failure patterns
- ▪In December 2021, AscendEX suffered a $77.7 million hot wallet hack, after which it pledged full compensation to users
- ▪Other crypto firms, including Celsius and BlockFills, have previously blamed market conditions before revealing significant financial shortfalls
- ▪On June 23, ESMA instructed unauthorized platforms to wind down operations in an orderly way and communicate clear exit timelines to clients
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