Crypto Exchange AAX Suspends Withdrawals as FTX Failure Reverberates
The suspension for as long as 10 days was blamed on the failure of an unidentified third party. The Hong Kong-based exchange has said it has no exposure to Sam Bankman-Fried’s company.
Crypto exchange AAX said it had suspended activity, citing a scheduled upgrade that had been delayed by turbulent markets.
The failure of a third-party partner means services will be delayed for as long as 10 days, the Hong Kong-based company said Sunday. The exchange did not identify the partner, and has said it has no exposure to FTX, a rival whose collapse has caused chaos in the industry.
“Withdrawals have been suspended to avoid fraud and exploitation,” the company said. “AAX will continue our best efforts to resume regular operations for all users within 7-10 days to ensure the utmost accuracy.”
Users’ balances have to be manually restored after a partner failed, causing the system to record abnormal data, the company said. Vice-President Ben Caselin tweeted that the delay was being taken as an “extra precaution” following scheduled maintenance.
On Friday, the company, which launched in 2019 as the first crypto user of the London Stock Exchange Group’s (LSEG) matching technology, said it had no financial exposure to FTX or its affiliates. It stores a “substantial amount” of its assets in cold wallets and doesn't lend out user funds to venture activities, it said.
FTX filed for bankruptcy protection in the U.S. on Friday, and CEO Sam Bankman-Fried resigned. There have also been reports of FTX’s assets being hacked, and of the exchange using customer funds to prop up its trading arm Alameda.
A spokesperson for the London Stock Exchange told CoinDesk it was not the third party referred to by AAX and that there were "no issues" with its systems.
UPDATE (Nov. 14, 11:33 UTC): Adds London Stock Exchange comment.
CORRECTION (Nov. 14, 17:05 UTC): AAX was the first crypto user of LSEG technology, not the first external user.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.