This Crypto Exchange Just Suspended Withdrawals – What is Going On

Source: AdobeStock / 9nong

Crypto exchange AAX announced that it had suspended withdrawals for up to 10 days due to a “scheduled system upgrade” that happened during a difficult time for the industry and the markets.

AAX’s website currently displays a notification that states,

“The current system upgrades require our third-party partner to proofread and restore all users' asset data. Due to the current market situation, the integration is taking longer than usual and is now in the queue to be completed within 7-10 days.”

The company published a blog post on Sunday, stating that crypto users are “rightfully concerned” about the operational and financial stability of centralized cryptoasset exchanges “in light of the insolvency of one of our industry’s largest players last week.”

It is referring to the now infamous fall, and subsequent bankruptcy, of the major crypto exchange FTX that shook the cryptoverse and caused a contagion spreading across the space.

The exchange stated that,

“AAX scheduled a system upgrade that will help protect our users from the multiple malicious attacks that we’ve observed during this vulnerable time.”

It went on to cite a “failure of our [unnamed] third-party partner” that resulted in some users' balance data being “abnormally recorded” in the system. Therefore, claimed the team, they decided to limit the services to prevent additional risks, meaning that “the technical team has had to manually proofread and restore the system to ensure maximum accuracy of all users’ holdings.”

Ben Caselin, Vice-President of AAX, urged all to give the exchange time to “open up gradually while ensuring absolute system integrity.”

The exchange claims that they are “working extremely hard to offer limited withdrawals to minimize risk,” adding that they created an AAX User Withdrawal Request Form for withdrawal and other operational requests.

The Customer Service Team will be resolving the requests manually one by one, AAX said, in coordination with the security, operations, and compliance teams.

While nobody from AAX would ever ask for users’ account passwords or any other information that would compromise access to funds, the exchange warned some “relevant information” to verify one’s identity will be needed for manual withdrawal requests, such as a copy of ID and registered contact information.

No connection to FTX

In a November 11 press release, AAX stated that it had “no financial exposure to FTX and its affiliates,” adding that,

“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.”

As a number of exchanges are now turning to Proof of Reserves, AAX also stated that it is “the process of exploring Merkle Tree Proof-of-Reserves,” which is an independent and algorithmic audit by a third party meant to ensure that every user’s balance is accounted for in an exchange’s reserves.

“From the early days of Mt. Gox and the DAO Hack to Luna, this industry is no stranger to setbacks and crises,” Caselin said.

Meanwhile, as reported in mid-October, AAX and Web3 infrastructure company MoonPay announced that they were partnering to allow users to purchase crypto in their wallet without leaving the exchange. Hence, AAX users would be able to purchase crypto using debit and credit cards, bank transfers, Apple Pay, Google Pay, and more directly on the exchange, it said.

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