Bankrupt crypto exchange AAX allegedly started laundering 24,000 ETH

Analysts at Cyvers Alerts say an unknown entity moved over $55 million worth of Ethereum from wallets, associated with bankrupt crypto exchange AAX.

In an X thread on Feb. 20, blockchain analysts at Cyvers Alerts published an investigation revealing anomaly transactions originated from wallets allegedly owned by AAX, a crypto exchange that faced scrutiny after halting all withdrawals just two days following FTX’s bankruptcy.

According to the investigation, over $55.5 million worth of Ethereum (ETH) was moved from AAX wallets in early February in a move orchestrated by an unidentified entity. The transfers appeared to be aimed at laundering funds through decentralized exchange (DEX) platforms like UmbraCash and 1inch.

Cyvers Alerts noted that the entity executed a series of steps, converting ETH to Wrapped ETH (WETH) and then to the USDT stablecoin, before channeling approximately $20 million worth of crypto to the TRON blockchain via SwftCoin, a cross-chain service.

Analysts emphasized that these transactions exhibited patterns suggestive of attempts to bypass anti-money laundering measures. Furthermore, Cyvers Alerts revealed that certain funds stemming from AAX had been blacklisted by Tether Inc., the issuer of USDT. The remaining funds were reportedly deposited into centralized exchanges Bybit and MEXC. As of press time, UmbraCash, 1inch, Bybit, and MEXC have not issued public statements regarding the matter.

Following the collapse of FTX, AAX initially attributed the suspension of its activities and withdrawals to technical abnormalities, citing security concerns. However, subsequent developments saw Ben Caselin resign from his position as vice president of global marketing and communications at AAX, citing concerns over the exchange’s operational transparency.