FTX Japan, the Japanese division of FTX.com, has begun the process of moving customer funds out of its collapsed platform. The move comes after the company launched beta testing for a balance transfer process for a randomly selected group of customer accounts.
FTX Japan, the Japanese division of FTX.com, has begun the process of moving customer funds out of its collapsed platform. The move comes after the company launched beta testing for a balance transfer process for a randomly selected group of customer accounts. FTX Japan will use the feedback from the testing to make the process of confirming and transferring balances “as transparent as possible” for a wider group of FTX users. The company has apologized for causing inconvenience to its customers due to the long-term suspension of its services. FTX Japan laid out a timeline for the restoration of customer funds and resuming asset withdrawals as early as February.
The exchange has developed a recovery system that will enable affected users to retrieve their assets via Liquid Japan, which is the first exchange to be officially licensed by the Japan Financial Services Agency (JFSA). Under the process, FTX Japan's customers will become clients of Liquid, which acquired the client book and then conducted balance checks. FTX completed the acquisition of Liquid Group a year ago to serve Japanese customers through its subsidiary. The FSA-regulated venue also operates a clearinghouse for fiat-backed stablecoins which facilitates swaps, FX trading, and digital fiat onramps/offramps.
The Japanese watchdog ordered FTX Japan to suspend operations until December 9 and put together a business improvement plan. It was then given an additional three months, until March 9, to fulfill the regulator's orders. The extension came as the exchange was still unable to return customer assets while its trading systems continued to be out of function. FTX Japan suspended over-the-counter derivatives transactions and related margins, as well as new deposits, under the orders. During the suspension period, services relating to new account opening, spot trading, fiat currency deposits, incoming crypto transfers, and derivatives transactions were halted.
FTX Japan stopped client withdrawals on November 8 after Japan's regulator ordered it to suspend services. That came shortly after its parent entity fell into a dramatic liquidity crisis that reportedly required $8 billion to resolve. Three days later, FTX's founder Sam Bankman-Fried filed for Chapter 11 bankruptcy protection in the US. The Kanto bureau also ordered the exchange to hold its assets domestically over the same timeframe, properly reporting liabilities on its balance sheet. The regulator said that the exchange does not have the necessary structure to provide crypto exchange services in a manner deemed appropriate under Japanese standards.
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