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Hong Kong’s Failed AAX Exchange Transfers $56M in Ether

Hong Kong's AAX exchange moves $56M in Ether, sparking AML concerns after its 2022 collapse and subsequent arrests.
Hong Kong’s Failed AAX Exchange Transfers $56M in Ether

Highlights

  • AAX moves $56M Ether, sparking AML evasion concerns.
  • Hong Kong police arrest AAX execs amid $98M user losses.
  • Over 2M AAX users were left stranded after the sudden exchange collapse.

The defunct Atom Asset Exchange (AAX) in Hong Kong has started moving large amounts from inactive wallets. Ether worth over $56 million has been moved to different trading platforms, which has caused doubts about the objective of these transactions.

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Funds Movement Sparks Concern

Cyvers Alerts, a blockchain analytics firm, reported that over 24,000 Ether, worth about $55.6 million, began to be moved from AAX Exchange wallets at the beginning of this month. 

Analysts point out that the manner of these transactions reflects an effort to evade Anti-Money Laundering (AML) controls. Additionally, it has become known that part of the funds linked with the exchange has been frozen by Tether, making the unfolding event more intriguing.

Before its abrupt failure in November 2022, AAX had over 2 million registered users, making it one of Hong Kong’s largest crypto exchanges. The collapse was caused by the cessation of withdrawals and erasure of all social networks due to exposure to counterparty risks. This action followed the bankruptcy filing of another crypto behemoth, the FTX, emphasizing a period of crypto chaos.

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Arrests and Allegations

The fallout of the shutdown led to the arrests of AAX’s ex-CEO, Thor Chan, and board member Haoming Liang, by the Hong Kong police. They were arrested for trying to escape the city during a crisis. Despite this, the exchange’s founder, whose identity is yet unknown, is alleged to be at large with large amounts of user funds and the vital private keys to the exchange’s wallets.

This has left 2 million AAX users unable to access their accounts or withdraw their assets. Complaints from victims worldwide, including mainland China, Taiwan, Italy, France, and others, have been received with losses totaling HK$98 million. The police investigation established a deceitful ploy where system maintenance was falsely claimed to stop asset withdrawal, resulting in vast sums of money being lost.

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Hong Kong Police Action and Asset Recovery

Police have promptly taken action in response to the fraudulent activities and arrested two people related to AAX. Ongoing efforts are being pursued to map the path of the transferred funds and retrieve the affected users’ assets. The police have also warned about the risks associated with cryptocurrency trading, especially in light of recent operational difficulties faced by various platforms.

Read Also: Bitcoin ETF Hype is Likely Impacting Coinbase’s Popularity Among Retail Investors

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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