AAX Exchange Collapses

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AAX Exchange Homepage/Logo

Hong Kong-based crypto exchange AAX, which previously emphasized top performance, high security, and deep liquidity, has faced significant challenges. AAX suspended all operations, citing system upgrades requiring third-party verification of users' asset data, and expects completion within 7-10 days. The exchange's sudden halt has led to concerns about the fate of user funds. AAX's troubles stem from a series of events, including FTX's bankruptcy, leading to firings, resignations, and doubts about the exchange's resumption. The situation escalated to the appointment of joint provisional liquidators by the Grand Court of the Cayman Islands. Users with frozen funds are organizing information-sharing groups and seeking legal channels for recourse, with victims in Taiwan alone reaching over 1,000 people with $100 million in damages.

This is a global/international case not involving a specific country.

About AAX

"Digital assets are leading the charge Create, Grow and Secure your wealth with AAX"

"Top Performance for Fast Trading Using LSEG Technology, AAX is able to match orders with ultra-low latency for the ultimate trading experience." "High Security for Your Assets AAX is CCSS-compliant ensuring the safety of funds and client data." "Deep Liquidity & Tight Spread Trade futures with leverage with maximum efficiency and minimal slippage."

"They have 750usd in sign up bonuses. Count me in!"

"On the day of FTX’s bankruptcy, AAX stated it had no financial exposure to FTX and its affiliates. “All digital assets on AAX remain intact with a substantial amount stored in cold wallets and user funds are never exposed to counterparty risk from any financing or venture activities,” it said."

"Hong Kong-based crypto exchange AAX suddenly suspends all operations, citing system upgrades which require “our third-party partner to proofread and restore all users' asset data”. Expect to be completed within 7-10 days."=

"Hong Kong cryptocurrency exchange Atom Asset Exchange (AAX) has lost most of its staff to firings and resignations and is unlikely to resume operations after freezing assets on the platform on Nov. 13, former vice president and head of research Ben Caselin told Forkast News on Friday.

AAX, which had as many as 121 employees according to its LinkedIn profile though Caselin said the number was more than triple that, is one of a series of crypto-related businesses caught in the fallout from the Nov. 11 bankruptcy of the FTX exchange."

"In preparation for a potential legal battle, users with funds stuck in AAX have set up information-sharing groups like “AAX Rights Protection Group” on Telegram, which has drawn more than 2,000 members. The users are seeking information on their frozen assets and the whereabouts of the AAX team.

According to Caselin, the concerns about user funds are valid. “I think the best case scenario is to begin a formal process of unwinding the company, with funds going back out to user’s cold wallets.”"

"The number of victims in Taiwan alone is at least more than 1,000 people and the amount of damage has reached $100 million. It was a case of international fraud. Currently, the victims have sought legal channels, but the detection of international cases requires the assistance of the Bureau of Investigation to avoid absconding and leave the country."

"On 8 March 2023, pursuant to an Order of the Grand Court of the Cayman Islands (“the Court”), it was ordered that Angela Barkhouse and George Kimberley Leck of Quantuma (Cayman) Ltd. be appointed joint provisional liquidators ("JPLs") of Atom Holdings (In Official Liquidation) (“the Company”). Subsequently, on 11 July 2023, the Court ordered that the JPLs be appointed as Joint Official Liquidators of the Company (“the JOLs”).

The JOLs have appointed themselves or their affiliates as the directors or interim judicial manager (“IJM”) of the Company’s subsidiary companies in Singapore, Seychelles, and Malta. Luke Anthony Furler of Quantuma (Singapore) Pte Limited acts as the IJM of the Company’s Singapore subsidiaries AAX Asia Private Limited and AAX Singapore Private Limited.

The JOLs and IJM have engaged Kroll Issuer Services Limited as their claims agent which is managing creditor proof of debt claims on their behalf. AAX.com users with outstanding balances can register their claim as a creditor by completing the online form available in the “Claims” section of the website here.

AAX.com users who have registered their claim in this way will receive updates from the JOLs and IJM as and when the JOLs and IJM are in a position to do so."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - AAX Exchange Collapses

Date	Event	Description
November 11th, 2022 12:32:00 AM MST	Twitter Thread

AAX posts to remind users that they have no financial ties with the FTX exchange, which just collapsed recently.

|- |November 13th, 2022 8:03:22 AM MST |Reddit Thread |A Reddit thread is started about the potential collapse. |- |November 13th, 2022 8:55:17 AM MST |Watcher.Guru Article |Watcher.Guru puts out an article about the temporary suspension. |- |November 13th, 2022 7:58:00 PM MST |Web3IsGoingGreat |Web3IsGoingGreat reports on the situation. |- |November 21st, 2022 12:46:00 AM MST |CoinDesk Article |The exchange has reportedly been shuttered since Nov. 13 after a malicious attack made it impossible to verify customer balances or allow withdrawals. |- |November 29th, 2022 6:19:29 PM MST |CoinCu Article |A CoinCu article estimates the loss in Taian alone at $100m. |- |December 3rd, 2022 8:14:18 AM MST |Forkast Article |Forkast reports on the collapse situation. |- |March 8th, 2023 |Provisional Liquidators |Angela Barkhouse and George Kimberley Leck of Quantuma (Cayman) Ltd. are appointed joint provisional liquidators ("JPLs") of Atom Holdings. |}

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $100,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.