Changpeng Zhao, widely known as CZ, has cautioned that acquiring smaller centralized crypto exchanges can introduce severe security risks, including legacy backdoors and undetected vulnerabilities. His warning came shortly after BitMEX and BitMart announced their respective wind-downs, and amid a renewed industry debate over centralized versus self-custodial asset storage.
The discussion was reignited by X user MASTR, who published a database listing dozens of centralized exchanges that have shut down for various reasons over the past decade — from hacks and bankruptcies to orderly closures. Among the latest entries are BitMEX (closing on September 23, 2026), BitMart (January 31, 2027), and AscendEX (already ceased operations on July 1, 2026).
CZ stressed that buying a centralized exchange requires deeper technical due diligence than typical corporate acquisitions. He explained that an acquirer may inherit old infrastructure with hidden security weaknesses, meaning a future hack could originate from a backdoor placed by the previous team, even long after the deal closes. Despite these risks, he maintained that acquisitions remain feasible if companies conduct thorough security assessments before finalizing any transaction.
The closures have also reinvigorated the long-running custody debate, with MASTR’s database highlighting how users surrender control of their private keys once they deposit funds on a centralized platform. As consolidation talk continues, the industry now faces a dual challenge: evaluating M&A opportunities while ensuring inherited systems do not compromise user assets.
