The next generation digital asset exchange, the only crypto trading platform leveraging LSEG Technology’s matching engine, will harness Wall Street-based Solidus Labs’ crypto-native compliance platform to improve integrity and comply with regulation.
Hong Kong / New York — May 19th, 2020 — , the next-generation cryptocurrency exchange powered by London Stock Exchange Group Technology’s Millennium Exchange, and member of London Stock Exchange Group’s Partner Platform , announced today it is partnering with Solidus Labs . AAX will work with the New York-based provider of crypto-native market surveillance and compliance software to monitor for trade abuse risks and improve market integrity. In partnering with Solidus Labs, AAX is adopting the highest digital asset market surveillance standards.
Solidus Labs’ market surveillance solutions will enhance AAX’s institutional-grade trading infrastructure with state-of-the-art compliance tools tailored for digital assets. AAX is gaining a heightened ability to detect, investigate, manage and report abusive behavior based on behavioral and historical patterns — using a single unified dashboard for holistic risk monitoring and increased operational efficiency. The threats addressed with the new capabilities include common concerns like wash trading, spoofing and pump-and-dump, as well as new crypto-specific manipulation typologies like cross-market manipulation, and hack-and-trade.
According to the CryptoCompare Exchange Benchmark report , only five out of 159 ranked exchanges employ an externally provided surveillance system — and those who do are leading the ranking for trading volume credibility. As a result, numerous studies consistently raise concerns that as much as 95% of crypto trading volume is potentially manipulative.
Due to the lack of high surveillance standards across the crypto industry, it is difficult to account for the exact amount of funds manipulators swindle from legitimate crypto traders, but the number is estimated at tens of billions of dollars. An analysis by the Wall Street Journal from August 2018, as one example, estimated that pump & dump schemes in crypto markets accounted for $825 million in trading activity in only six months, translating to hundreds of millions of dollars in lost funds.
Market manipulation is one of the biggest hurdles to increasing institutional adoption and regulatory approval of digital assets. Citing concerns about high levels of manipulation, the United States Securities and Exchange Commission has so far consistently rejected Bitcoin-ETF applications, with Chairman Jay Clayton stating the agency will need to see effective market surveillance . Regulators globally are introducing compliance guidelines and intensifying licensing requirements, with leading agencies like the Hong Kong Securities and Futures Commission and the Malaysia Securities Commission listing detailed requirements for market surveillance.
“We believe that all investors, retail and institutional, deserve fair markets, where prices are accurate and trade volumes are real. We are excited to partner with Solidus Labs to provide state-of-the-art market surveillance,” says Thor Chan, AAX CEO. “It’s all about taking it to the next level,” Chan continues. “Heeding valid regulatory concerns and safeguarding our markets against manipulation with Solidus Labs’ advanced systems. This opens the door for the development of more sophisticated digital assets, ETFs other instruments that will further integrate crypto with global finance.”
“Solidus Labs gets our mission and understands how important market integrity is to the further expansion of this emerging investment space,” Michael Wong, AAX COO, explains. “For us, adopting this technology represents a significant step forward in our effort to deliver a cutting-edge crypto exchange where investors can trade with confidence and trust.”
“More than ever before in crypto, compliance and integrity mean growth, and the industry’s future depends on individual exchanges effectively monitoring for manipulation to improve the credibility of the industry and accelerate adoption” says Solidus Labs CEO Asaf Meir. “AAX has built an exchange that sets the highest bar for integrity, compliance and fairness for both retail and institutional investors, and we’re delighted to support their mission with our tailored solutions.”
Launched in November 2019, AAX is the first crypto exchange to be powered by LSEG Technology. It Is also the first exchange to have joined London Stock Exchange Group’s Partner Platform, providing institutional clients ease of access to the crypto market.
Offering OTC, Spot, and Futures trading, quoting more than 50 cryptocurrency pairs, including its native exchange token AAB, and listing 5 perpetual futures contracts for Bitcoin, Ether, Litecoin, Ripple, and EOS, which can be traded with up to 100x leverage, AAX provides a secure, deeply liquid, ultra-low latency and fully compliant trading platform. http://www.aax.com
[Originally published as a press release on Associated Press, Bloomberg, Yahoo Finance and other publications]
All the crypto news compliance professionals need to know. This month's highlights: SEC Chairman Jay Clayton again calls for better market surveillance and reduced manipulation before the agency can approve a crypto-ETF; A study by The Block raises concerns that 86% of volume in 48 exchanges is potentially wash trading; 94% of surveyed US, UK and Canadian endowment funds are actively engaged with crypto investments
Keynoted by SEC Commissioner Hester M. Peirce and featuring speakers from Coinbase, Gemini, Circle, GDF, Tagomi, ErisX and the Chamber of Digital Commerce among others.
Coindesk‘s Institutional Crypto expert Noelle Acheson hosted Solidus Founder & CEO Asaf Meir for an hour-long discussion of the unique compliance and market manipulation challenges.