FTX Japan is seeking to resume withdrawals after its parent, the defunct FTX exchange, authorized a plan to repay deposits.
Users of the collapsed crypto exchange in Japan may be among the first clients to receive their money back if the strategy is successful. On Nov. 8, withdrawals from FTX Japan were halted after the exchange’s operations were suspended by local banking regulators. Three days later, Sam Bankman- Fried’s global company, FTX Trading Ltd., requested Chapter 11 bankruptcy protection in the United States.
The company’s bankruptcy counsel in the U.S. was able to affirm, according to FTX Japan, that the funds from Japanese users should not be part of FTX Japan’s estate given how these assets are handled and property interests under Japanese law.
“This week, we were able to confirm with the law firm representing the FTX group in the Chapter 11 bankruptcy proceedings that Japanese customer cash and cryptocurrency should not be part of FTX Japan’s estate given how these assets are held and property interests under Japanese law,”
FTX Japan said in a recent statement.
FTX Japan management team strategy
According to FTX Japan, the FTX Trading management team had been working on the plan to resume withdrawals for the past two weeks. FTX Japan added,
“Our engineering teams have already begun developing this plan in order to make it possible for FTX Japan customers to withdraw their funds. We are implementing controls, security audits, reconciliations, and reviews as part of the plan to set up a reliable and secure process.”
The notification additionally states that the subsidiary will publish information regarding customer assets kept in segregated wallets and in a trust account each Monday. FTX Japan also hopes to publish additional information regarding the resumption of withdrawals for FTX Japan users in short order.
The development comes after the Financial Services Agency of Japan (FSA) took administrative action against FTX Japan on November 10 after its parent company halted withdrawals without any explanation.
The exchange also received multiple orders from the Japanese financial authorities, including one for business suspension, one for retaining assets domestically, and one for enhanced business procedures. The FSA asked the company to halt over-the-counter derivatives and consumer deposits because FTX had credit issues.