The announcement landed like a dull thud in a quiet mempool: ABFinance, the CeFi platform founded by former Bybit co-founder Helen Liu, was entering orderly liquidation. The project had been announced five months prior. It never launched a single product. No code, no testnet, no users. Just a press release and a promise of compliance.
I’ve seen this playbook before. In 2022, when Celsius froze withdrawals, I was already three weeks into coding a Python script to monitor Aave and Compound liquidation thresholds. The warning signs were there—not in the yield rates, but in the foundational assumptions. ABFinance’s assumption was that a “compliance-first” CeFi platform could survive the US regulatory labyrinth with a founder’s pedigree and a slick website. The ledger now tells a different story.
Context: The Architecture of a Non-Started Project
ABFinance was positioned as a “one-stop financial platform” connecting fiat and crypto. Its business model bundled deposits, yield, trading, and spending—a classic CeFi conglomerate. The selling point: “from day one, comply with the US regulatory framework.” Helen Liu, co-founder of Bybit, was the face. She announced the project in March 2025. By August, the orderly liquidation was public. The official reason? Unreleased.
This is not a technical failure. There is no code to audit, no smart contract to exploit. The failure is at the infrastructure layer: the cost of US regulatory compliance, the difficulty of securing banking partnerships, and the capital moat required to survive a Howey test. When I audit a protocol, I look for state transitions. Here, the only state transition was from “announced” to “liquidated.”
Core: The Real Order Flow—Regulatory Gravity vs. Founder Hype
Let’s break down the numbers. The project had zero TVL, zero users, zero market cap. But the cost of capital was not zero. Legal fees, compliance audits, banking application fees—these are sunk costs that mount before a single asset is custodied. The estimated burn rate for a US-regulated CeFi startup is $500k–$1M per month in legal and operational overhead. Five months? That’s $2.5–$5M in non-refundable expenditure.
The core insight is not that ABFinance failed, but that it failed before it could fail. The market often prices CeFi startups on founder reputation and narrative. The reality is that the US regulatory environment has shifted from “wait and see” to “block and tackle.” The SEC’s enforcement actions against BlockFi, Celsius, and Kraken’s staking program created a clear precedent: any platform offering yield on user deposits is likely a security. ABFinance’s “deposit + yield” model was a direct hit.
I’ve written about this before: Yield is the shadow cast by risk taken. In CeFi, that risk is counterparty default and regulatory action. When the risk materializes before the yield is even generated, the shadow is just a void.
Contrarian: The Blind Spot Isn’t the Founder—It’s the Infrastructure
The market consensus might be: “Helen Liu is a strong founder; she’ll try again.” Or: “This is a blip; CeFi will recover.” The contrarian view is that the entire CeFi model of “fiat on-ramp + yield + custody” is structurally incompatible with US securities law unless the platform holds a banking charter. The blind spot is the assumption that a Bybit co-founder’s operational expertise in exchange technology translates to navigating the US banking system. It doesn’t.
Bybit built a global exchange with minimal regulatory friction by operating in jurisdictions with lighter frameworks. ABFinance tried to flip that narrative—but the cost of a US-compliant infrastructure is orders of magnitude higher. The project’s five-month lifespan is not a founder failure; it’s a structural proof that the regulatory moat is deeper than the capital moat.
I do not trust whispers; I trust verified hashes. The hash of ABFinance’s story is a single block: announced → liquidated. No intermediate state. The lesson for the market is not to trust the next CeFi startup just because it says “compliance-first.” It’s to demand proof of banking partnerships, capital reserves, and a clear exemption from the Howey test.
Takeaway: The Window for Unlicensed CeFi Has Closed
This is not an isolated event. It’s a signal that the window for unlicensed CeFi in the US has closed. The next wave will be either DeFi protocols with self-custody or chartered banks with SPDI licenses. Anything in between is just a tax write-off.
When the code bleeds, only the ledger survives. ABFinance’s ledger shows a clean liquidation—no user funds were lost because no user funds were ever deposited. That’s the best outcome for a project that never should have been announced. For the rest of the market, the takeaway is blunt: Migrations are just purgatory for lazy capital. Stop waiting for the next CeFi savior. Start building with verifiable, on-chain infrastructure.