Hong Kong crypto exchange AAX has lost most staff, unlikely to reopen, says former executive

Hong Kong cryptocurrency trade Atom Asset Exchange (AAX) has lost most of its staff to firings and resignations and is not likely to resume functions right after freezing property on the system on Nov. 13, previous vice president and head of study Ben Caselin instructed Forkast News on Friday.

AAX, which experienced as a lot of as 121 workforce in accordance to its LinkedIn profile although Caselin explained the variety was additional than triple that, is 1 of a series of crypto-connected corporations caught in the fallout from the Nov. 11 personal bankruptcy of the FTX trade.

U.S. crypto system BlockFi froze functions and then filed for individual bankruptcy on Tuesday, citing “significant publicity to FTX and involved corporate entities.” 

Investors around the globe have been pulling crypto off exchanges in anxiety of far more failures. Nevertheless, numerous have had belongings trapped as platforms froze functions due to small liquidity, contributing to a further spiral of trader anger and distrust.

On the day of FTX’s personal bankruptcy, AAX said it had no money publicity to FTX and its affiliate marketers. “All digital property on AAX remain intact with a sizeable quantity saved in cold wallets and person money are by no means exposed to counterparty danger from any funding or venture activities,” it claimed. 

Even so, Caselin, who left the corporation on Monday, said that interaction from higher management experienced develop into “opaque and messy.”

Caselin reported he turned aware of the severity of AAX’s challenges various days following its services were halted on Nov. 13. At the time, AAX reported the freeze was a protection measure in response to what it termed a sequence of destructive attacks on the system. 

Even so, times later on, staff were being termed into crisis conferences to talk about AAX’s have to have for far more funds, Caselin claimed, including that various teams inside AAX started pushing to resume operations by either providing equity, a merger or acquisition, or issuing credit card debt. 

“Then everything ran into a wall,” he reported, including that “basically, all of the staff” ended up terminated or quietly resigned, as investor talks grew to become shrouded in non-disclosure agreements, and interaction with management stalled. He explained he did not know the whereabouts of other executives.

Up and running? 

On Nov. 15, AAX put out an up to date push release: “In order to substitute the money essential to resume all our services, AAX will need to raise new cash. Although this is clearly a pretty challenging setting in which to increase new funds, the quantity is not massive by current market specifications,” the assertion explained.

“Our current shareholders have contributed more funds about the past 7 days and we have secured interest on new investments. At this phase, we estimate that on major of our liquidity, we are in a good placement to get our operations and products and services absolutely up and jogging.”

Even so, on Nov. 30, the Hong Kong-centered South China Morning Submit, citing an unnamed former AAX worker, described that AAX experienced confronted monetary issues prior to FTX’s collapse thanks to inadequate hazard administration tactics at AAX’s marketplace maker, 10kM Investing. 

The Post said it gained an unsigned email from 10kM Investing declaring it is “not suffering from severe trading losses” and that it had no impact or influence on AAX. The organization did not go away a title or speak to variety, the Submit explained. On its website, 10kM Trading describes itself as a “leading liquidity company in the electronic asset market.”

Forkast emailed press contacts for AAX and 10kM Investing but did not obtain a response. AAX experienced previously disabled its Telegram accounts, which have been used to converse with people. 

Ben Caselin said he was unfamiliar with the precise exercise of 10kM Trading but that there were being a amount of brokerages that offered liquidity to AAX’s trade.

The asset freeze at AAX and speculation about its ties with 10kM Buying and selling has drawn comparisons to the failure of FTX, which reportedly used shopper resources to finance trading at FTX’s sister brokerage Alameda Investigation.

According to some stories, Alameda experienced an US$8 billion hole in its stability sheet when it imploded, and the concern is substantially of it may have been consumer funds from FTX. 

In preparation for a possible authorized struggle, people with funds caught in AAX have set up facts-sharing teams like “AAX Legal rights Security Group” on Telegram, which has drawn more than 2,000 members. The people are searching for info on their frozen assets and the whereabouts of the AAX staff. 

According to Caselin, the considerations about person resources are valid. “I consider the greatest case situation is to get started a formal course of action of unwinding the business, with money going back again out to user’s chilly wallets.”

“If there is a liquidation and it turns out there are user money missing, the focus will become, where by did that decline occur from?”