A defunct Hong Kong exchange has begun moving funds out of its wallets to various decentralized exchanges and centralized platforms, allegedly to avoid Anti-Money Laundering (AML) controls.
As told by blockchain analytics firm Cyvers Alerts on Feb. 20, over 24,000 Ether (ETH), worth $55.6 million, were moved from the Atom Asset (AAX) Exchange wallets starting early this month. “The observed patterns indicate that the address is attempting to avoid AML tools,” analysts wrote. “Additionally, some funds originated from the exchange have been blacklisted by Tether.”
Prior to its discovery, the last known transactions involving AAX Exchange wallets took place in October 2023 and November 2022. Before its collapse, AAX was one of the largest crypto exchanges in Hong Kong, with over 2 million users.
On Nov. 13, 2022, just two days after crypto exchange FTX filed for bankruptcy, AAX, too, halted withdrawals and wiped out all social channels due to counterparty risk exposure. “On Dec 16 ’22, both its website and app ceased functioning,” Cyvers wrote. “Initially, AAX attributed the freeze to security measures in response to alleged malicious attacks.”
* User funds are not under direct threat. All energy is now spent on getting AAX to a position where we will be able to firstly ensure users can retrieve their funds and secondly to do so in an orderly manner with services resuming.— AAX (@AAXExchange) November 14, 2022
Following its shutdown, AAX’s former CEO Thor Chan and board member Haoming Liang were arrested by Hong Kong police in 2022. However, the founder of AAX, whose identity remains unknown, is allegedly still on the run with 230 million Hong Kong dollars ($29.41 million) worth of users’ money and private keys holding access to exchange wallets. At the time of publication, the exchange’s website is currently offline and its Twitter account has not been updated since November 2022.