BitMart Shutdown: Legal Risks for Users, Employees, and KOLs Explained

Woofun AI reports that the cessation of BitMart’s operations, as detailed by legal analyst Gao Mengyang, has precipitated a complex tripartite legal crisis affecting users, domestic employees, and key opinion leaders (KOLs). The shutdown is not merely a commercial exit but a trigger for distinct liabilities across these three groups, requiring immediate strategic assessment of asset recovery, regulatory exposure, and evidence preservation.

The operational wind-down follows a strict timeline announced on July 26, 2026, wherein BitMart declared its decision to phase out trading platform operations after assessing market conditions and future development directions. From this date, the platform halted new user registrations, digital asset and fiat currency deposits, and the initiation of new spot orders or contract positions. The cessation of spot trading, contract trading, and other transaction services was scheduled for August 26, with the complete shutdown of the trading platform set for January 31, 2027. This phased approach impacts core services including spot trading, perpetual contracts, financial management services, staking options, and referral incentives, creating a narrow window for users to manage their positions before full closure.

User asset management requires precise navigation through the discontinuation of various product lines. BitMart’s announcement specified that spot trading, contract trading, copy trading, grid trading, and other automated trading functions had already stopped or were planned to stop. Products such as Earn, staking, lending, and the Launchpad are being discontinued in phases, with redemption and settlement procedures communicated via detailed announcements or in-platform notifications.

Crucially, submitting a withdrawal request does not signify the completion of review or the transmission of assets to the blockchain. Requests may undergo rigorous verification of account identity, login device, IP address, withdrawal address, source of funds, transaction history, Travel Rule compliance, and sanctions list status. If necessary, additional proof of fund source or wallet control may be demanded, meaning users must actively monitor the status of their withdrawals rather than assuming automatic processing.

When withdrawal statuses remain stuck at 'Processing,' users must first verify whether a Transaction ID (TXID) has been generated. The absence of a TXID typically indicates that assets are still under internal review or processing by the platform, whereas the presence of a TXID allows users to verify the on-chain status in the corresponding blockchain browser. For those facing no progress, legal recourse options vary.

The first approach involves continuing communication through official channels, gathering all relevant information such as account UID, currency type, quantity, network, withdrawal address, application number, and submission time, and formally requesting explanations for delays. If reliable partners, platform contacts, or KOLs are involved, intermediaries may assist in tracking progress, though all communications must be documented, and users must never pay 'acceleration fees' or 'unfreezing fees' to individual wallets.

BitMart has explicitly stated that there are no priority withdrawal channels or paid fast-tracking services, and staff will never request private keys or seed phrases.

Woofun AI data shows that the second legal approach for users is overseas litigation or arbitration based on the user agreement and the entity through which the account was opened. This route requires determining the specific company with which the user signed a contract, the applicable laws, the jurisdiction for dispute resolution, and the enforceability of judgments in the location of the assets. Simply knowing the platform name is insufficient to identify the correct defendant. The third approach is filing a report with local Chinese authorities.

However, exchange shutdowns, delayed withdrawals, or falling prices do not automatically constitute fraud or other crimes. Criminal charges depend on evidence of fabricating assets, maliciously transferring user funds, market manipulation, continuing to collect funds despite known inability to repay, or other abnormalities like missing personnel or destroyed evidence.

In 2026, a notice issued by eight regulatory agencies stipulated that civil actions involving individuals investing in virtual currencies and related financial products may be deemed invalid if they violate public order and good morals, with losses borne by investors. Yet, 'bearing investment risks oneself' does not permit platforms to arbitrarily withhold user assets nor prevent investigations into suspected fraud, embezzlement, or asset diversion.

Thus, the choice between cross-border litigation, domestic reporting, or negotiation depends on asset location, platform identity, evidence availability, and the cause of losses.

Domestic employees face significant legal risks even if the operating entity is registered overseas. Many virtual currency exchanges maintain technical, operational, business, customer service, community management, and product teams working remotely in China. Current regulatory rules prohibit foreign entities and individuals from providing virtual currency-related services to domestic entities in any form.

Domestic entities and individuals who knowingly or should have known that a foreign entity is illegally providing such services and still assist them can be held legally accountable, with criminal liability imposed in serious cases. This does not mean all exchange employees bear criminal responsibility. Authorities examine the employee’s start date, job rank, job responsibilities, actual work content, clients served, salary and bonus structure, and involvement in contract management, user recruitment, funding, risk control, and settlement processes.

For instance, those responsible only for general administrative or HR tasks, or basic work unrelated to users—such as designing high-leverage contracts, setting margin call rules, managing domestic communities, handling user funds, or managing agent commissions—face significantly lower risks. Responsibility is determined by what the employee did, knew, benefited from, and how they acted upon discovering abnormalities.

Employee liability assessment and defense strategies hinge on demonstrating limited involvement and lack of subjective awareness. If an employee has been with the project for a short time, receives only a regular fixed salary, was not involved in profit guarantees, trading guidance, or fund handling, lacks a comprehensive understanding of the project’s overall business model, and promptly stopped working, raised objections, or resigned when abnormalities were detected, these facts should be fully considered.

In one case handled by the author, evidence was organized based on the party’s start date, salary structure, job responsibilities, actual scope of involvement, and actions taken after detecting abnormalities, leading to a comprehensive defense argument and a favorable outcome of no prosecution. This underscores that responsibility is never determined simply by labeling someone as an 'exchange employee' but requires a granular analysis of their specific role and conduct within the platform’s operations.

KOLs and agents face distinct legal exposure due to their role in user acquisition and promotion. Exchanges rely heavily on KOLs, agents, and community managers to attract users, especially for perpetual contracts and copy trading services. KOLs attract users through registration links, invitation codes, trading communities, and educational courses, with the platform paying commissions based on trading volume or transaction fees. When the platform operates normally, these incomes are presented as promotion fees, channel fees, or commissions.

However, once the platform’s core operations are deemed criminal, it becomes crucial to determine whether KOLs were merely ordinary advertising partners or deeply involved in user recruitment and transaction organization. Regulatory notices in 2026 clearly stated that internet companies are prohibited from providing commercial displays, marketing promotions, or paid traffic referral services for virtual currency-related activities. Domestic entities that knowingly or should have known that such foreign services are illegal and still assist them can be held legally accountable.

Therefore, KOLs should not rush to delete promotional content, close communities, or align messages with partners. Instead, they should preserve cooperation agreements, platform account backends, promotional materials, user sources, commission calculation methods, and actual payment records. Whether commissions constitute illegal gains requiring return depends on subjective awareness and actual involvement, not just the receipt of income.

The classification of perpetual contracts as gambling or financial investment is a critical legal distinction. From recent case handling, perpetual contracts have become a focal point for investigating actual controllers, executives, technical staff, operators, and KOLs under the charge of operating a gambling house. In June 2026, an article on prosecutorial practice published on the website of the Supreme People’s Procuratorate noted that the criminal classification of virtual currency perpetual contract platforms should be determined through a substantive review of the platform’s operation and profit model, to accurately distinguish between financial investment, gambling, fraud, and illegal business operations.

Key points of review include whether the leverage is extreme, whether the platform acts as a counterparty against users, whether it exploits market manipulation and margin call mechanisms to cause user losses, whether a closed loop of betting and payout exists, and whether the platform has substantial control over trading rules and fund settlements. This means that providing real-market matching and charging reasonable fees is not equivalent, from a criminal perspective, to acting as the user’s trading counterpart, manipulating price charts, or directly obtaining users’ principal through margin calls.

This distinction is equally important for ordinary employees and KOLs, as their involvement in designing contract rules, accessing market data, developing margin call algorithms, managing agency systems, or handling fund settlements directly affects how closely their actions relate to the platform’s core criminal activities.

Evidence preservation is the most critical immediate action for all parties involved. Users should save account balances, order records, position details, deposit and withdrawal histories, financial management subscription and redemption records, platform announcements, customer service tickets, and on-chain TXIDs. Employees should keep employment contracts, salary records, job descriptions, work instructions, permission scopes, resignation records, and communication records of raising objections.

KOLs should retain cooperation agreements, promotional materials, registration links, backend data, commission details, and complete communication records with the platform. It is important to note that preserving evidence does not mean hiding assets, deleting records, or creating new explanatory documents. After an exchange shuts down, if relevant parties suddenly delete chats in bulk, transfer commissions, or forge contracts, what might otherwise be normal behavior could turn into new suspicious facts.

The shutdown of BitMart exposes previously overlooked business models, funding pathways, and role allocations, requiring users, employees, and KOLs to act swiftly to clarify their positions and protect their rights. For users, earlier asset inventory and evidence preservation provide more room to address abnormal withdrawals. For employees and KOLs, sooner clarification of job responsibilities, income sources, and actual involvement better equips them to provide accurate explanations when risks arise, marking a critical juncture in navigating the legal aftermath of exchange closures.