AAX, a Hong Kong-based global exchange that halted user withdrawals on Monday, says they are at risk of a capital deficit and looking to gather more investments to resume normal operations, the company announced Tuesday night in Asia.

“While this is clearly a very difficult environment in which to raise new capital, the amount is not large by market standards,” AAX said in its official statement

AAX, however, did not disclose the exact amount it needs to raise to resume operations as usual.

The trading platform added that its existing shareholders have contributed additional capital over the past week and have secured interest from new investments, stating that it is in a “good position” to resume normal operations. 

FTX.com, once the world’s second-largest crypto exchange by volume, struggled with a liquidity crisis and eventually filed for bankruptcy last week, sending an industry-wide shockwave that affected multiple players in the crypto space.

See related article: AAX crypto exchange says it is suspending withdrawals amid FTX fallout

It was reported Tuesday that crypto lender BlockFi Inc. is preparing for possible bankruptcy filings, acknowledging that it had a significant amount of exposure to FTX.

Following the FTX meltdown and the announcement of withdrawal suspension at AAX, some AAX investors have sought to withdraw their capital from the exchange, increasing the risk of capital deficit at AAX, AAX said in the statement.

AAX did not give a specific timeline to when it will restart withdrawal services. In its initial announcement of suspension on Monday, it said seven to 10 days.

In a video interview conducted on Monday prior to the latest statement, AAX vice president and head of AAX Trends Ben Caselin told Forkast that what is being witnessed at AAX and other exchanges is “a massive statement of fear” led by the collapse of FTX.

The trading platform, which had around US$4 billion in a 24-hour trade volume a week ago, says it suspended withdrawals on Monday when its technical team found abnormalities in the system that signaled a “clear malicious intent” that threatened sensitive data in its records and prompted a necessary system upgrade.

“It’s not even a matter of contagion. If I really have to describe it at this stage, it’s more a matter of unfortunate opportunism,” said the AAX vice president. “There’s a lot of vulnerability in the market, we find ourselves vulnerable at the systemic level. We definitely want to make sure that user assets are safe. We’re trying to do things properly. It’s going to take a bit of time.” 

See related article: Crypto lender BlockFi faces possible failure amid FTX collapse, WSJ says

Caselin and AAX’s latest statement made assurances that the user funds in AAX are safe and have not been compromised. Caselin also told Forkast that no executive or member of AAX have moved their funds out of AAX although the current situation affects them as well.

“We’re not looking to run off with the funds, that’s for sure. There’s just no confidence right now to open up withdrawals,” Caselin said.

In a situation where the exchange is not able to gather the necessary capital to rejuvenate the services, it will commit itself to ensuring the distribution of customer assets through legal procedures, AAX added.

AAX also backtracked from its initial statement on Monday that the suspension was prompted by “a failure of a third-party partner,” now saying that was a miscommunication on their part in referring to malicious actors posing threats to its data.

“If we come out of this, then that’s a great thing,” Caselin said.

AAX is currently accepting withdrawal requests from users via a Google Forms document it shared on Monday in the announcement of withdrawal suspension.