Changpeng Zhao, widely known as CZ, said acquisitions of cryptocurrency exchanges can expose buyers to security risks that go beyond those found in a typical corporate transaction. His comments followed separate wind-down announcements from BitMEX and BitMart, as consolidation discussions continued across the crypto industry.

CZ said companies that purchase centralized exchanges could inherit hidden vulnerabilities, including legacy backdoors, security flaws, and other technical risks left by previous teams. He warned that these weaknesses may remain undiscovered during the deal process and could lead to security incidents after an acquisition closes.

CZ Highlights Technical Due Diligence Risks

Responding to the recent exchange closures, CZ said buying a centralized crypto exchange requires more caution than acquiring many other types of businesses. He said an acquiring company does not only take over customers and operations, but also inherits the exchange’s underlying infrastructure.

That infrastructure can include trading systems, custody-related controls, wallet operations, internal access permissions, and other software or operational processes that support deposits, withdrawals, and account activity. In an exchange acquisition, those systems are often as important to review as customer accounts, licenses, or revenue because they can affect whether the combined platform can operate securely after the deal.

According to CZ, old security weaknesses may remain embedded in acquired systems even if they are not identified during negotiations. He said a hack could occur after completion because of backdoors or other unresolved issues from the prior team.

CZ did not rule out exchange acquisitions. Instead, he said such transactions remain possible but require deeper technical and security reviews before completion. His comments emphasized due diligence around inherited technology rather than the commercial terms of any potential deal.

BitMart and BitMEX Wind-Downs Draw Attention

CZ’s remarks came as BitMart announced an orderly wind-down and BitMEX confirmed that it would cease exchange operations on Sept. 23. BitMart also said users would continue to be able to withdraw assets during its shutdown process.

The announcements from BitMart and BitMEX renewed attention on mergers and acquisitions in the crypto exchange sector. Some companies have chosen to close operations, while others continue to consider expansion through acquisitions.

For potential buyers, shuttering exchanges can present different considerations from conventional distressed-asset deals. A crypto exchange may hold sensitive operational knowledge, user data, wallet infrastructure, and security histories that require specialized review before any transfer of control.

The developments also prompted discussion about whether larger exchanges would consider acquiring smaller competitors despite the technical and operational challenges involved. CZ’s comments suggested that any such deal would need to account for inherited infrastructure as well as business assets.

Security Remains Central to Exchange Deals

CZ’s warning focused on operational and technical risks rather than market opportunities. He said companies evaluating exchange acquisitions should consider whether legacy systems could expose a new owner to future security incidents.

His remarks came amid ongoing industry consolidation and recent exchange closure announcements. CZ maintained that acquisitions remain feasible, but said buyers must carefully evaluate inherited technology before completing a transaction.

The central concern, according to CZ, is that a buyer may inherit undiscovered vulnerabilities from the previous operator. His comments underscored the importance of technical and security due diligence as exchanges consider possible acquisitions following the latest wind-down notices.