- Due to an alleged “system glitch,” AAX has suspended withdrawals for a period of 7-10 days.
- Many have accused AAX of downplaying its financial exposure to FTX in response to a recent statement.
- The cryptocurrency exchange has previously denied having financial ties to FTX and its subsidiaries.
- AAX claims to have upgraded its system to protect users from malicious attacks.
- The firm’s third-party partner failed, resulting in abnormal inputs in some users’ balances.
AAX has halted the withdrawal services on its platform for an approximate 7-10 days, citing a system glitch.
The measures undertaken by the cryptocurrency exchange has evoked quite the reaction from the speculated 2 million AAX users and other members of the platform.
On November 3rd, users reported receiving notice of a system upgrade; in the message, AAX communicated that the upgrade was taking longer than expected.
In reaction to a recent statement, many have accused AAX of trying to downplay its financial exposure to FTX, as one user, identifying on Twitter as “@MuhammetDavuth1”, demanded that the cryptocurrency exchange disclose its relationship with FTX.
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What did put you in trouble ? Firstly you must explain this. What is your relations with FTX or Alameda ? Why does it effect you guys ?Hoping only works in movies.Will you be able to open withdraw or not ?Dont make this harder than what it is!Another user, “@dextrian”, claims that the withdrawal notice came at the wrong time. According to dextrian, AAX must prove to its customers that the suspension is authentic by providing Proof of Reserves, thereby demonstrating that it has no financial exposure to FTX, as has previously been claimed.— M. Davuthan Kalyoncuoglu (@MuhammetDavuth1) November 13, 2022
Not a very good time to make this kind of withdrawal freezing. I would advice to not only do that as quickly as possible, but also make the proof of reserve live. Proff more, trust less, is the current drive of the industry— Dextrian Dragon (@dextrian) November 13, 2022
What Has AAX Had to Say?
In light of the rising panic, the Honk Kong-based cryptocurrency exchange has released a statement urging users to remain calm. AAX further reported that it has been carrying out an upgrade to its system in order to protect users from malicious attacks during this time of heightened market vulnerability.
However, the firm divulged that a failure on the part of its third-party partner had manifested abnormal system inputs in some users’ balances; the cryptocurrency exchange stated that it had therefore decided to suspend all withdrawal operations in order to avoid further risk to user funds.
AAX has encouraged users to send direct messages to the firm’s Twitter account to resolve their complaints.
Emphasis on “No Relationship with FTX”
Echoing this position, AAX Vice President Ben Caselin posted a Tweet on Sunday 13th, in which he admitted that the upgrade had come at the wrong time. Despite this, the executive emphasized that the upgrade would be essential to aiding the exchange in tackling some serious loopholes.
Not a very good time to make this kind of withdrawal freezing. I would advice to not only do that as quickly as possible, but also make the proof of reserve live. Proff more, trust less, is the current drive of the industryThe cryptocurrency exchange has previously denied having financial exposure to FTX and its subsidiaries prior to recent developments.— Dextrian Dragon (@dextrian) November 13, 2022
In the statement, AAX stated:
“More importantly, 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.”
On the Flipside
- Amidst all the accusations, AAX has begun exploring Merkle Tree Proof of Reserves systems in order to provide the “highest level of transparency” on the exchange’s liquidity and risk management levels.
Why You Should Care
Recent events have cause trepidation and negative sentiment toward centralized exchanges to skyrocket. AAX joins a growing list of such exchanges to have halted withdrawals in the name of protecting users during the FTX crisis.