Update on AAX
15 Nov 2022
We want to provide our users, team, and partners with an update on the situation at AAX - and how we are taking action to stabilize the operations of the exchange and move toward opening up withdrawals as soon as possible. Protecting user accounts and assets is our top priority.
First of all, we believe AAX has the potential to come through during this incredibly difficult time for the entire market, our users, and our team with user funds and our business intact, as well as a pathway toward restoring trust ahead of us. We recognize the concern that our users feel and are fighting every step of the way to protect our community and ensure we can come out of this predicament together.
We have faced an unprecedented series of developments, outlined below, that have led to acute pressure on AAX’s capital position. In order to replace the capital needed to resume all our services, AAX will need to raise new capital. While this is clearly a very difficult environment in which to raise new capital, the amount is not large by market standards.
Our existing shareholders have contributed additional capital over the past week and we have secured interest on new investments. At this stage, we estimate that on top of our liquidity, we are in a good position to get our operations and services fully up and running.
We will continue to work tirelessly to bring in more capital from within our network and across the industry. If we are able to inject additional capital by the end of this week, AAX should be able to resume services as usual. This will be announced along with follow-up plans to get back our momentum.
If AAX is unable to secure funding to enable us to restart operations, AAX is committed to initiating legal procedures to secure and ensure the distribution of assets with continuous communication to our global user base and relevant stakeholders on relevant details.
How we got here
After the collapse of FTX, we understand that our technical team had observed abnormalities in our systems with clear malicious intent which presented a threat to sensitive data in our records. For security reasons, the exchange was brought to a halt and we stopped withdrawals. We recognize that any delay or halt in withdrawals is extremely concerning to our users, but we want to assure all users that this has been done with the best intentions of protecting their funds. We also want to be clear that no funds have been compromised, that assets held with AAX are not under threat from hackers, and that none of the issues we face are in any way related to AAX’s matching engine.
We acknowledge that we could have done a better job of communicating with our users during the early days of withdrawals being suspended. Messages across our platform and social media channels were not as well aligned as they could have been, largely because of the multitude of issues and the challenges of an evolving situation.
In particular, our initial notification on the AAX app that linked the suspension to “issues with a third party” would have been better expressed as us facing issues with malicious actors.
Why do we need additional capital?
AAX has always been a prudently managed exchange. However, after we suspended withdrawals and in the context of the FTX saga, some of our investors indicated their desire to withdraw their capital from AAX, putting us at risk of capital deficit, which we have to make up for, before we are in a solid enough position to resume normal operations, ensure liquidity and continuity. AAX’s approach here has been immediate intervention, rather than trying to address this deficit through unsustainable and risky methods such as trading or borrowing. We aim to approach this differently and get through this industry crisis productively.
In spite of the threats to our systems that we have observed from malicious actors, we are committed to starting to process withdrawals as soon as we have resolved the capital shortfall.
Other issues surrounding open positions on derivatives markets, or questions around reward programs will be dealt with fairly and with reason.
AAX has grown considerably during 2022, our mission has really been focused on using digital assets to provide the best use cases to users all around the world. We believe we have a viable and exciting future in serving the community that has grown around this exchange, provided we are able to navigate this period of crisis for the wider industry.
Please pay attention to our announcement and Twitter account @AAXExchange to see the updates that will follow.
Share this article