Liquidity doesn't flow where compliance cannot breathe. That's the simplest way to digest the ABFinance shutdown—a project that never launched, yet managed to die in the span of five months. It's a story that mirrors the macro reality we've been tracking since 2017: crypto markets are not just about technological innovation, but about the gravitational pull of global liquidity flows. And right now, that gravity is pulling away from CeFi in the United States.
Skepticism isn't a luxury in this market; it's a survival instinct. When I first heard about ABFinance in early 2025—a CeFi platform positioning itself as a "one-stop fiat-to-crypto bridge" under full US compliance—I didn't see a breakthrough. I saw a familiar pattern. In my years analyzing over 50 whitepapers during the 2017 ICO boom, I learned that the projects screaming "compliance-first" the loudest were often the ones hiding the weakest economic models. The founders were betting on regulation as a moat, not on technology or liquidity design. ABFinance was no different.
Hook: The Five-Month Ghost
On March 2025, the crypto community buzzed with news: Helen Liu, co-founder of Bybit, was launching a new CeFi platform called ABFinance, targeting US users with a compliant deposit, yield, trading, and spending suite. The narrative was perfect—a seasoned founder, a clear regulatory roadmap, and a bull market hungry for institutional-grade solutions. Five months later, in August 2025, ABFinance announced it was ceasing operations and entering orderly liquidation. No launch, no users, no token. Just a quiet exit.
This isn't just another failed startup. It's a diagnostic signal. In a bull market where liquidity is abundant and risk appetite is high, a project with a top-tier founder and a compliance-first pitch should have at least reached beta. The fact that it didn't—and that it folded so quickly—exposes a deeper structural fault line in the crypto landscape.
Context: The CeFi Compliance Mirage
ABFinance's stated goal was to be a regulated intermediary between fiat and crypto, offering deposit accounts, yield generation, trading, and a spending card. It was a classic CeFi model—centralized custody, trust-based, and reliant on banking partnerships. The key differentiator was its commitment to "abide by the US regulatory framework from day one." This was a direct response to the post-FTX era, where users craved safety. But here's the rub: compliance is not a binary state. It's a process that involves SEC registration, state-level money transmitter licenses, bank partnerships, and ongoing audits. The bar for a US-based CeFi platform is insanely high.
From my experience auditing DeFi protocols during the 2020 composability thesis, I've seen how quickly liquidity moves when regulatory friction appears. In 2020, Aave and Uniswap grew 4,000% in TVL because they were permissionless—no gatekeepers, no compliance overhead. Contrast that with ABFinance, which needed to negotiate with banks, register with FinCEN, and likely engage with the SEC over its yield products. That's a multi-year, multi-million-dollar effort. Five months is not enough to even finish the paperwork.
Liquidity doesn't care about your compliance paperwork; it flows to where it doesn't get trapped. The ABFinance team likely underestimated the time and cost required to achieve full regulatory compliance in the US. When they realized the timeline was unrealistic, they cut their losses. The "orderly liquidation" phrasing suggests a voluntary decision, not a forced shutdown. But the underlying cause is the same: regulatory feasibility.
Core Insight: The Regulatory Ceiling for CeFi
The core insight here is not just that ABFinance failed, but that the failure was predictable based on the macro environment. The US regulatory landscape for crypto has been a patchwork of enforcement actions, guidance, and legislative gridlock. The SEC's regulation-by-enforcement approach has made it nearly impossible for a CeFi platform to operate legally without constant legal risk. BlockFi, Celsius, and Voyager all collapsed under the weight of their own promises. ABFinance was supposed to be different because it was "compliant from day one." But being compliant in theory and being compliant in practice are two different things.
Let's look at the technology: ABFinance was a CeFi platform—no smart contracts, no decentralized governance, no novel consensus mechanism. Its innovation was purely business model integration: combining deposits, yield, trading, and spending into one interface. That's a fine product, but it's not defensible. Coinbase, Kraken, and even neobanks like Revolut already offer similar services. The only differentiator was its claimed compliance edge. But because the project never launched, we can't verify if that edge was real.
From a tokenomics perspective, there was no token—or at least, none was announced. The source material suggests that the project may have planned a token later, but it never materialized. That means there was no speculative element to draw in retail capital. The funding model was likely based on equity or venture debt, which is harder to raise in a bear market for CeFi. The lack of a token also means that the project's value capture was unclear. How would it make money? Through fees on deposits, spreads on trading, and interest on lending. That's a thin margin business, especially when competing with established players.
The market impact was minimal. ABFinance had no users, no TVL, and no token price to collapse. But the signal it sends is significant: even the most well-connected founders cannot easily build a compliant CeFi platform in the US. This adds to the growing narrative that CeFi, as a model, is incompatible with US regulation. The capital is flowing instead to decentralized solutions—DeFi protocols, self-custody wallets, and regulated stablecoins like USDC. The ETF approvals in 2024 already started this shift, and ABFinance's failure is another data point.
Contrarian Angle: The Founder's Reputation is a Liability
Here's the contrarian take: Helen Liu's pedigree as a Bybit co-founder was actually a disadvantage, not an advantage. Bybit, while successful, has a complicated history with US regulators. The exchange was fined by the CFTC in 2023 for illegally offering derivatives to US customers. Bybit eventually exited the US market. When Liu launched ABFinance, she carried the baggage of that enforcement action. The US regulators would have scrutinized her more closely, not less. The "compliance-first" pitch might have been a red flag, signaling that the project was trying to whitewash its founder's past.
Skepticism isn't about doubting the technology; it's about questioning the execution path. In my 2022 analysis of the Terra-Luna crash, I saw how algorithmic stablecoins failed because their founders overleveraged on reputation and narrative. Liu's case is similar: she leveraged her Bybit reputation to attract attention, but the regulatory hurdles were too high. The market's expectation was that she could pull off this launch because of her experience. But experience in exchange operations does not translate to experience in navigating US banking regulations. The skill set mismatch was fatal.
Moreover, the timing of her departure from Bybit (April 30, 2026) and the ABFinance announcement (March 2025) suggests she may have been preparing to leave while still affiliated with Bybit. This could have created conflicts of interest or limited her ability to fully commit to the new project. The orderly liquidation might have been a way to avoid further reputational damage to both Bybit and herself. In a way, the failure was a strategic retreat, not a technological defeat.
Takeaway: The Death of Compliance-as-a-Moat
What does this mean for the market? First, it confirms that "compliance" is not a moat—it's a minimum requirement. Projects that promise compliance as their primary value proposition are likely to fail because compliance is a cost, not a revenue generator. The real moat is technology, liquidity depth, or network effects. Second, the trend of capital migrating from CeFi to DeFi will accelerate. The ABFinance failure is a marginal event, but it adds to a cumulating case against centralized platforms in the US.
Finally, the next cycle will likely see a resurgence of projects that focus on regulatory clarity through legislation, not through individual company efforts. The stablecoin bill and the market structure bill are moving through Congress. Until then, CeFi in the US is a minefield. ABFinance is just the latest corpse.
Liquidity doesn't wait for regulatory approval; it moves ahead and leaves the dead projects behind. The question is: will the next founder learn from this, or will they repeat the same mistake?
