15 Feb 2025

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Is crypto exchange AAX next to go bankrupt?

Is crypto exchange AAX next to go bankrupt?

Immediately after the FTX collapse, another centralized exchange, AAX has run into trouble. Numerous red flags suggest that the exchange can’t fulfill its liabilities and prevents withdrawals.

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On November 13, 2022, the Hong Kong exchange AAX announced on its website that it had halted all transactions, including the processing of trade orders and withdrawal requests, citing a major system upgrade.

The exchange

The exchange's announcement on the website

The notification reads that the problems were caused by a “third-party partner”. The system update is allegedly required to proofread and restore all users’ asset data. The exchange planned to resume its activity in 7-10 days, once the integration work was completed.

However, the trading platform didn't resume its regular activity at the end of the specified period. The crypto exchange AAX deleted its official accounts on YouTube and Facebook, which made users even more suspicious… So what's going on with AAX?

About the exchange

Cryptocurrency platform AAX (Atom Asset Exchange) was registered in Seychelles and officially launched in November 2019.

AAX has offices across the Asia-Pacific region, with a team of 200 people led by CEO Thor Chan.

The geographical distribution of users: USA (11.6%), India (11.1%), Turkey (9.4%), Taiwan (8.9%), Australia (8.7%), and Hong Kong (8.2%).

Continued updates

On November 19, the company published a new notification on its website stating that they need to continue updates on the platform.

As it turned out, after the FTX crash, the technical team of the exchange noticed some “anomalies” in its systems, which posed a threat to users' confidential data. All transactions were suspended for security reasons, but the assets stored on the AAX platform do not seem to be threatened by hackers.

After this announcement, some of the key investors have expressed their desire to withdraw their capital from AAX, amid the alarm and panic caused by the FTX bankruptcy, putting the exchange at risk of liquidity deficit. The exchange's representatives said they need additional capital to resume normal operations.

AAX also added that the company will have to initiate legal procedures to secure and ensure the distribution of assets if it fails to attract the necessary funding.

Later, AAX once again admitted that the exchange needs an injection of additional capital to resume its regular activity. They noted that the management had already met with “50 prospective investors, a few of whom entered the critical stages of our negotiation”.

These prospective investors need more time to evaluate the situation of AAX and do their due diligence. AAX has a chance of receiving sufficient funding and resuming normal operations over the coming weeks based on best estimation. This is the best outcome for all AAX partners and users

— reads a new AAX statement.

On November 21, the platform closed all outstanding derivatives contracts, as it was mentioned in the announcement.

A high probability of a sad ending

On November 28, Ben Caselin, Vice President of AAX, confirmed his resignation from the exchange in a Twitter thread. The screenshot below shows a message from AAX HR saying that the company has decided to dissolve (bankruptcy and liquidation), employees can be guaranteed wages only in November, and users' assets on the platform can only be returned half.

Tweet of Ben Caselin, Vice President of AAX

Tweet of Ben Caselin, Vice President of AAX

Dear all, it’s true I have resigned from AAX. I did fight for the community but none of the initiatives we came up with were accepted.

People, including my own family, ask me for help, but there is nothing I can do. Everyone is waiting on actions. I still believe things will be handled without evil intentions, but the damage is done. The brand is no more and trust is broken.

Disappointing conclusions

It looks like we have another exchange in line to go bankrupt. In the near future, the exchange's native token AAB will probably be “paved over” as it happened with the FTX token. As of November 20, it has already plunged 35%. Crypto markets are going through dark times. CEXes go bankrupt one after another… It's high time to diversify your assets if you haven't done it yet.

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