Following a government directive to suspend customer withdrawals, FTX Japan is working towards resuming such operations by the end of 2022.
FTX Japan says that it will resume customer withdrawals by the end of this year, according to local reports. The Japanese arm of the bankrupt Bahamian-based crypto exchange FTX also explained why its customers could not currently withdraw their funds. According to FTX Japan, it uses the same payment system as its parent company, which is currently suspended. Nonetheless, FTX Japan said it is working towards facilitating withdrawals for all customers, presumably in December. As of November 10th, the FTX Japanese branch has 19.6 billion yen or $138 million worth of deposits.
On November 10th, the Financial Services Agency (FSA) also ordered FTX Japan to halt withdrawal operations following its parent company’s collapse. That same day, the exchange’s Japanese arm announced it was going into “close-only” mode. This mode means that users could only close out existing positions but not enter new ones.
FTX Japan identifies as a separate entity, and “strictly follows the Japanese regulation on asset segregation.”
Details of FTX Japan Withdrawals Directive
In its order, the FSA expressed concern for FTX Japan’s health in the aftermath of FTX’s implosion and called the suspension necessary. In addition, the government agency and integrated financial regulator also said:
“It is necessary to take all possible measures to prevent a situation in which [Japanese customers’ assets] are leaked to a [foreign] affiliated company.”
Furthermore, the FSA did not specify a reinstatement date in its order but stated that FTX Japan continues to enlist new customers amid the withdrawal suspension.
FTX Japan also received a “business improvement order” in addition to its basic suspension order. This order requires the local FTX arm to embark on several obligations designed to enhance operability. Such commitments include thoroughly identifying users, protecting users’ assets, and appropriately disseminating “information to users regarding the protection of their assets.”
At the time, the FSA directive required FTX Japan to submit a “written business improvement plan” for addressing the abovementioned obligations by November 16th.
Bahamian crypto exchange FTX filed for bankruptcy earlier in the month following a dramatic collapse in short order. The fallen company currently owes around $3.1 billion to a long list of creditors, according to a recently-filed court document that does not name the creditors. However, FTX reportedly owes its largest creditor a hefty sum of $226 million.
In the aftermath of its bankruptcy filing, FTX also came under investigative proceedings by governmental and regulatory agencies in the US and the Bahamas. These include the US Justice Department, the Securities and Exchange Commission (SEC), and the Bahamian state government. Furthermore, the embattled exchange’s CEO Sam Bankman-Fried stepped down, with John Ray named as his successor.
Once touted as a crypto wunderkind, Bankman-Fried has remained away from the public eye since FTX’s insolvency crisis. However, the 30-year-old MIT graduate recently granted a media session with The New York Times where he lamented his fate.