AAX

Navigating through the landscape of cryptocurrency exchanges has always been a bit like walking through a minefield. Some platforms shine brightly before burning out spectacularly. AAX is one such cautionary tale worth examining.

What Was AAX Exchange?

AAX, once a promising player in the crypto trading space, positioned itself as a sophisticated trading platform that offered spot, futures, and OTC trading services. The exchange allowed users to trade Bitcoin alongside more than 20 other cryptocurrencies. What made it stand out initially was its integration with the London Stock Exchange Group's matching engine for executing trades – a feature that promised institutional-grade performance with sub-100 microsecond latency.

I remember checking out AAX back when they were making waves in the crypto community. Their platform seemed sleek and professional compared to some of the clunkier exchanges I'd used before.

The exchange operated from its Hong Kong headquarters but was actually registered in Seychelles – a common setup for crypto businesses seeking favorable regulatory environments. At its peak, AAX boasted over 2 million users across the globe.

Features That Once Made AAX Attractive

AAX's appeal extended beyond just basic trading. For cryptocurrency enthusiasts, the platform offered several notable features:

• Competitive Fee Structure: With taker fees at 0.15% and maker fees at 0.10%, AAX positioned itself below industry averages, making it attractive for active traders.

• Futures Trading with Leverage: The exchange allowed users to speculate on price movements with high leverage – up to 100x on Bitcoin and 50x on Ethereum. This attracted traders looking for amplified exposure to crypto markets.

• P2P Marketplace: AAX facilitated peer-to-peer trading, enabling users to exchange cryptocurrencies for fiat currencies – creating an on/off ramp for those entering or exiting the crypto ecosystem.

• Attractive Staking Options: At one point, the platform offered a 4.3% interest rate on Bitcoin with no lockup period, which was quite competitive in the market.

One thing that always struck me as odd though – users couldn't deposit fiat currencies directly. You had to bring your crypto to the party, which limited accessibility for newcomers.

The Collapse: A Domino Effect

The crypto world is nothing if not interconnected, and AAX's downfall demonstrates this perfectly. Following the spectacular collapse of FTX in November 2022, AAX promptly halted all withdrawals, citing "counterparty risks" – essentially admitting that FTX's failure had created contagion effects reaching their operations.

This initial withdrawal suspension was just the beginning of the end. By December 2022, the exchange's website and app had become non-functional, and perhaps most telling, its social channels were completely wiped – a digital ghost town where a bustling exchange once stood. The last social media update from the company occurred in November 2022, right before the collapse.

The Aftermath: Arrests and Missing Funds

The story gets darker when you look at what happened after AAX's operational shutdown. In 2022, AAX's former CEO Thor Chan and board member Haoming Liang were arrested, while the founder reportedly remains at large with approximately $29.4 million in user funds.

But the saga doesn't end there. Fast forward to 2024, and blockchain analysis revealed that over $55.6 million in ETH had been moved from AAX wallets using decentralized exchanges – an apparent attempt to evade anti-money laundering controls.

Disturbingly, platform executives allegedly claimed technical issues while secretly liquidating positions, directly harming users who trusted the exchange with their funds.

Laundering Operations and Stolen Funds

The plot thickens with reports linking AAX to sophisticated fund laundering operations. In a particularly egregious case, over $26 million stolen from the FixedFloat exchange was connected to AAX laundering attempts.

Blockchain detectives traced how these funds were converted to USDT and moved across blockchains via the SwftCoin bridge – sophisticated methods designed to obscure the trail of stolen assets.

In 2024, exchange executive Su Weiyi was identified as the mastermind behind these operations, bringing some clarity to what had been a murky situation.

Regulatory Gaps and User Vulnerability

Part of what made AAX's collapse so devastating for users was the lack of regulatory protection. While the exchange had obtained a digital currency license from the Monetary Authority of Singapore (MAS), it displayed high-risk potential that went unaddressed.

The exchange also lacked protections under the EU's Markets in Crypto-Assets (MiCA) regulation, leaving users particularly vulnerable when things went south.

What Users Once Experienced

It's almost surreal to look back at user testimonials from AAX's operational days. Early adopters praised the platform's institutional-grade security measures and 24/7 monitoring systems. The exchange saw significant growth in 2020, with reports of 122,000 new signups and 50,000 KYC-verified users in just a 60-day period.

But hindsight is 20/20, and what seemed like robust security was clearly insufficient against internal threats.

Lessons for Crypto Investors

AAX's story reads like a classic crypto nightmare – promising technology, institutional backing, and technical sophistication, all undermined by alleged fraud and mismanagement.

If there's anything to learn here, it's that technical specifications and fancy partnerships don't guarantee safety in crypto. The exchange's use of the London Stock Exchange's technology didn't protect users from what appears to have been calculated deception.

For anyone navigating the still-wild world of crypto exchanges, AAX serves as a stark reminder: regulatory compliance, transparent operations, and proven track records matter far more than technical specs or marketing claims. Trust, once broken in this space, is nearly impossible to rebuild – as the ghostly remains of AAX's online presence continue to remind us.