Hong Kong’s AAX Exchange: $56M Transfer Sparks Concerns

Hong Kong’s AAX Exchange under Scrutiny for $56M Worth of Ether Transfer from dormant wallet, Raises Potential Money Laundering Concerns.

The Hong Kong-based Atom Asset Exchange (AAX), which has since gone offline, has begun transferring substantial sums of money from dormant wallets. A number of concerns have been raised regarding the motivation behind the transfers of roughly $56 million worth of Ether to various trading platforms.

Money Transfer Raises Red Flags

A blockchain analytics company called Cyvers Alerts said that at the start of this month, users started transferring over 24,000 Ether, which is about $55.6 million, out of their AAX Exchange wallets.

Experts have noted that these transactions appear to be an attempt to circumvent AML rules. The fact that Tether has locked some of the funds associated with the exchange adds intrigue to the emerging events.

With over 2 million customers, AAX was one of the biggest cryptocurrency exchanges in Hong Kong before its sudden collapse in November 2022. Because of the exposure to counterparty risks, withdrawals ceased and all social networks were erased, leading to the collapse. This move underscored a time of crypto anarchy, which had preceded the bankruptcy filing of another crypto giant, the FTX.

Allegations and Arrests

As a result of the shutdown’s aftermath, the Hong Kong police detained Haoming Liang, a board member, and Thor Chan, AAX’s former CEO. Attempting to flee the city during an emergency led to their detention. Regardless, the identity of the exchange’s originator is still a mystery, but he or she is allegedly running amok with user funds and the private keys to the wallets where those assets were stored.

As a result, 2 million AAX users are stuck without the ability to access their funds or make withdrawals. Some 98 million Hong Kong won has been reported in damages from victims all over the globe, including mainland China, Taiwan, Italy, France, and many more. According to the police inquiry, a scheme was uncovered wherein a large amount of money was lost due to the false assertion that system repair may halt asset withdrawals.

Response from the Hong Kong Police and Recovery of Assets

Two individuals connected to AAX were apprehended by the police in reaction to the fraudulent operations. The investigation into the whereabouts of the transferred monies and the recovery of the impacted users’ assets is continuing. With several platforms experiencing operational issues as of late, the police have also issued warnings about the dangers of bitcoin trading.