Hong Kong cryptocurrency exchange AAX in limbo after FTX crisis forces withdrawal freeze, executive departure

AAX personnel are incommunicado after the exchange froze withdrawals and deleted social media pages, revealing Hong Kong’s exposure to the FTX fallout

The exchange’s former research head resigned this week, saying the company was being ‘overly opaque’ and handling things ‘without empathy’

Reading Time:2 minutes

AAX has become the latest cryptocurrency exchange to face troubles from FTX’s bankruptcy, highlighting the risks that remain in Hong Kong. Photo: Shutterstock

Published: 12:12pm, 29 Nov 2022Updated: 8:28pm, 29 Nov 2022

Corrected [8:20pm, 29 Nov, 2022]

[8:20pm, 29 Nov, 2022]
Clarifies that Thor Chan is a former Chief Executive of AAX.

A Hong Kong cryptocurrency exchange has become the latest casualty of FTX’s collapse this month, leaving thousands of investors and clients in limbo and revealing the city’s exposure to a market it has recently sought to better regulate.

Atom Asset Exchange (AAX) has effectively shut down after it deleted its social media accounts and froze withdrawals this month, with the team now incommunicado. Angry investors have formed several group chats on Telegram titled “AAX users defending rights”, with each drawing more than 1,000 users demanding to know the AAX team’s whereabouts.

Adding to its troubles, a former executive, who this month attended Hong Kong FinTech Week, revealed on Twitter on Monday that he had resigned, saying he was “fighting for the community but none of the initiatives we came up with were accepted”.

“The way things are handled is without empathy and overly opaque,” wrote Ben Caselin, AAX’s former head of research and strategy. “I still believe things will be handled without evil intentions, but the damage is done. The brand is no more and trust is broken.”

AAX’s YouTube page and one of its Facebook pages have also disappeared this week. AAX has previously sponsored content for South China Morning Post’s Morning Studio.

While the specific losses of AAX’s fall are unknown, the exchange’s de facto closure offers another warning sign for Hong Kong’s ambition to become a virtual asset hub. On Tuesday, US-based cryptocurrency lender BlockFi filed for bankruptcy in New Jersey.

AAX was founded in 2018 and officially launched its exchange the following year, right after Hong Kong’s Securities and Futures Commission (SFC) announced its opt-in regulatory framework governing virtual asset trading platforms. Its former chief executive Thor Chan told the Post in 2019 that the exchange welcomed regulations, but he believed “part of the market will remain unregulated for a while”.