Hong Kong Crypto Exchange AAX Re-opening Hinges on Capital Raise

AAX's reopening at the end of this week depends on a capital raise and it may have to resort to legal action if that fails, the Hong Kong exchange said Tuesday.

AAX temporarily shut down on Sunday, saying the failure of an unnamed "third party partner" meant it had to manually verify customer balances before it could make any payouts.

That story is now changed, with a statement posted on the company website saying it was rushing to raise extra capital from its network and across the industry.

"If we are able to inject additional capital by the end of this week, AAX should be able to resume services as usual," the exchange said. "If AAX is unable to secure funding to enable us to restart operations, AAX is committed to initiate legal procedures to secure and ensure the distribution of assets."

No funds were compromised, and assets are not under threat from hackers, said the company, though admitting it may have misrepresented its original reasons for closing.

"Our initial notification on the AAX app that linked the suspension to 'issues with a third-party' would have been better expressed as us facing issues with malicious actors," the exchange said, noting that engineers had spotted abnormalities that suggested hackers were targeting AAX's sensitive data.

On Sunday, AAX cited turbulent markets as one reason for the disruption, but has denied having exposure to FTX, the major crypto firm which on Friday filed for insolvency after revelations first published by CoinDesk.

In a statement earlier Tuesday, AAX said 2,000 users had requested withdrawals using a makeshift system introduced during the hiatus, adding that manual procedures meant returning deposits would take more time.