AAX reiterates withdrawal halt is unrelated to FTX contagion

Hong Kong-based crypto exchange AAX has reiterated that its suspension of withdrawals on the platform has nothing to do with the ongoing fallout from FTX’s collapse and rumors to the contrary are false.

The crypto community reported seeing a “System upgrade notification” message on Nov. 13, which said that a system upgrade “is taking longer than usual” which will delay withdrawals. Some shared concerns about whether the exchange was the next domino to fall after FTX and BlockFi.

However, in a Nov. 13 post, AAX reiterated the temporary halt to services was in order to fix a glitch in a system upgrade.

The exchange said it was understandable why users may have panicked over its halting of withdrawals on Nov. 13.

“In light of the insolvency of one of our industry’s largest players last week, crypto users are rightfully concerned about the operational and financial stability of centralized digital asset exchanges.”

We are hopeful that as a community we can brave through these troubling times, together.

— AAX (@AAXExchange) November 13, 2022

The crypto exchange, which is understood to have 2 million users worldwide, explained the scheduled system upgrade is the result of “the failure of our third-party partner” which led to some users’ balances being “found abnormally recorded in our system.”

As a result, it has limited its services to prevent further risks, including a seven to ten-day suspension of withdrawals “to avoid fraud and exploitation.”

Fears of contagion from the fall of FTX have sparked many in the crypto community to advise others to pull their funds from centralized exchanges and into self-custody solutions.

AAX Vice President Ben Caselin acknowledged in a Nov. 13 Twitter post the inopportune timing of the upgrade, but said it was aimed at addressing “serious vulnerabilities.”

Bad timing for a scheduled maintenance at @AAXExchange, aimed to address serious vulnerabilities, to be prolonged for more than 24 hours. Out of extra precaution this will take longer. Wait for official announcement.

— ₿en Caselin HODL (@BenCaselin) November 13, 2022

Caselin also pointed out that the task was “Not easy while market is fearful.”

“Given the already fearful circumstances in the industry, opening up will require some caution and will be gradual, as sentiment cools.”

Related: Exchange outflows hit historic highs as Bitcoin investors self-custody

In an earlier Nov.11 Twitter post AAX said they had “No financial exposure to FTX and its affiliates.”

“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,” it added.