The Japanese subsidiary is one of 134 companies involved in FTX’s bankruptcy proceedings, but it has been working on a plan to return client funds.
After making sure that its customers’ assets are not part of FTX’s bankruptcy proceedings, the Japanese branch of the now-defunct crypto exchange FTX has come out with a plan for how to resume withdrawals.
The company gave an update on December 1, saying that it had been able to confirm that its customers’ assets “should not” be part of FTX Japan’s estate. This is because Japanese law says that crypto exchanges must keep customer funds separate from their own assets.
The law firm representing FTX Group in the Chapter 11 bankruptcy proceedings, Landis Rath & Cobb LLP, said this.
After buying the Japanese cryptocurrency exchange Liquid on February 2, FTX Japan didn’t open until June of this year. It was meant to serve the Japanese customers of the exchange.
But because its parent company had liquidity problems at the beginning of November, FTX Japan stopped letting people take money out on November 8.
A few days later, on November 10, the Financial Services Agency of Japan said it had taken administrative action against FTX Japan and ordered it to stop accepting new deposits and follow a business improvement order.
The company was then listed as one of the 134 companies that were part of FTX Trading’s chapter 11 bankruptcy filing on November 11.
Since then, FTX Japan has said that re-enabling withdrawals is their main goal and that they hope to do so by the end of 2022.
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With the recent confirmation that its users’ assets are not considered to be part of FTX Japan’s estate, this would give them a way to get their money back.
“Japanese customer cash and crypto currency shouldn’t be part of FTX Japan’s estate given how these assets are held and property interests under Japanese law,” the company said.
FTX Japan said that its management is in regular contact with Japanese regulators and has sent them the first draft of their plan to resume withdrawals. This suggests that regular consultations will happen “as key milestones are met.”
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