Tether-backed Chilean cryptocurrency exchange Orionx is permanently shutting down after a forensic audit identified more than $7 million in customer assets that had been transferred to wallets outside the company's control, according to information published by Coin Bureau on X and subsequently detailed by Orionx.

The exchange has suspended withdrawals, affecting more than 100,000 users, while it begins a formal closure and asset-restitution process. Orionx said its forensic review found transactions involving customer assets that were moved to externally controlled wallets. The company has also filed criminal complaints against two co-founders, who deny wrongdoing.

Audit Traces Asset Transfers to 2018–2021

According to the information cited by Coin Bureau, the transactions identified by the forensic audit occurred between 2018 and 2021 and involved Bitcoin, Ethereum, XRP and Polygon.

Orionx confirmed that the audit found assets held in custody had been transferred to wallets that were not administered by the company, with the amount exceeding $7 million. The exchange said it had reported the findings to Chilean prosecutors and filed a criminal complaint against former executives.

The company has not said that customers will immediately receive full restitution. Instead, it has temporarily frozen withdrawals while implementing a phased closure and recovery process. Orionx said the suspension was intended to ensure that customers were treated equally during the wind-down rather than allowing some users to withdraw ahead of others.

Chilean Regulator Clarifies Orionx Was Not Under Supervision

The shutdown comes amid heightened regulatory scrutiny of digital-asset businesses in Chile. The Financial Market Commission (CMF) said on Sept. 4 that it had rejected Orionx's application in June to register and obtain authorization under Chile's Fintech Law, which took effect in 2023 and created a registration regime for crypto-asset service providers in the country.

The regulator also emphasized that Orionx was not a supervised entity and that the CMF was not administering its closure or restitution process. It said it did not have authority to order the return of customers' funds or assets held by the exchange.

The regulatory status is significant for customers seeking clarity over the recovery process. With the CMF not supervising the wind-down, responsibility for the closure and the recovery of assets remains with Orionx and the relevant legal authorities.

Custody Risks Return to Focus

The Orionx case highlights the risks that can emerge when cryptocurrency exchanges hold customer assets in custody without mechanisms that allow users or regulators to independently verify the assets backing reported balances. Similar custody failures have preceded other high-profile exchange collapses, including FTX in 2022, after which proof-of-reserves attestations became more widespread across the industry.

For the broader crypto industry, the episode also reinforces the importance of transparent custody controls, internal governance and regulatory oversight, particularly as exchanges seek to serve larger retail markets.

The immediate question is how much of the missing assets can be recovered and what portion, if any, can ultimately be returned to more than 100,000 affected users. Orionx has begun the first phase of its closure and restitution plan, while the criminal complaints against the former executives move forward.

Source: Hokanews