Since we saw FTX filed for Chapter 11 bankruptcy protection, many crypto giants have fallen like dominos. One of the most recent casualties is AAX or Atom Asset Exchange.
The exchange recently halted withdrawals for the next 7-10 business days, blaming it on technical failures. According to the official announcement, withdrawals will be suspended, citing a scheduled upgrade that had been delayed due to market turbulence.
Allegedly, this halting is for consumers’ own protection to avoid potential hacking and misuse. Yet, those who know a thing or two about the market say that the issue could be a result of the exchange’s exposure to FTX.
AAX was established in Seychelles in early 2018 as a centralized crypto exchange. It offers crypto futures, spot pairs, P2P fiat trading, savings products, and API connectivity. It rapidly expanded and became one of the central exchanges in Asia, moving its headquarters to Hong Kong. Furthermore, in 2019, the firm appeared on the London Stock Exchange, earning the trust of over 2 million customers in more than 100 countries.
From all we know, this Hong Kong-based exchange had issues when customers’ balances were disrupted due to a technical problem with the unnamed third party on November 13th. Former VP Ben Caselin tweeted that this delay is only because the exchange was extra cautious in restoring balances manually after they’ve seen an abnormally increased activity as a result of the said failure.
However, the firm deleted all social media accounts and effectively cut all connections with users. In return, users formed a Telegram group demanding to know about executives’ whereabouts and their funds’ status.
As a final nail, the now former VP Ben Caselin tweeted on November 28th that he had resigned from the firm as none of his initiatives were accepted, and his fight for the community was unsuccessful.
Sounds like trouble in paradise, doesn’t it?
Since the official deadline of 10 days has passed and withdrawals are still not possible, there are some reasons to be concerned. While the AAX officials announced that they were not exposed to FTX and that what happened with their company is not a consequence of the said bankruptcy, it’s a big question if it’s true.
This failure will heavily impact trust in crypto firms, as well as Hong Kong’s personal intentions to become a financial hub for crypto community. In that light, AAX was supposed to be a shining example of how things can function smoothly with proper supervision. AAX moved its headquarters to the country in 2019, right after the Securities and Futures Commission announced its framework governing virtual asset trading platforms.
In its latest statement on November 21st, AAX said it would automatically liquidate all futures positions, including bonus ones. Thus, at the time of writing this article, we’re ten days without official statements, and users have been unable to withdraw their funds for over half of the month now.
Another Hong Kong exchange, Hbit, a subsidiary of HuobiGlobal, has reported that they have $18.1 million worth of crypto with FTX that they’re unable to withdraw. Is it possible that AAX is in a similar place but doesn’t want to announce it? It’s yet to see it.