FTX Japan’s Business Suspension Extended: Deadline Pushed to March 2023 Amidst Customer Asset Return Delays

In a continuing saga for users of the now-defunct cryptocurrency exchange FTX, its Japanese arm, FTX Japan, has received another extension on its business suspension. If you’re an FTX Japan customer waiting to access your funds, this news is crucial. Japanese financial authorities are giving the exchange more time to sort things out, but what does this mean for you and your assets?

Why the Continued Suspension for FTX Japan?

The crux of the issue lies in the return of assets to FTX Japan’s creditors. Despite initial hopes and plans, FTX Japan has yet to successfully return the custodied assets to its users. This delay has prompted the Japanese authorities to step in and extend the business suspension deadline. Let’s break down the key details:

• Regulatory Pushback: The Kanto Local Finance Bureau, a key financial regulator in Japan operating under the Ministry of Finance, has officially extended the business suspension.
• New Deadline: The new deadline for the suspension is now March 9, 2023. This is a three-month extension from the initial deadline of December 9th, requested earlier by Japan’s Financial Services Agency (FSA) in November.
• Reason for Extension: The core reason for this extension is simple: FTX Japan hasn’t returned customer assets. As the Kanto Local Finance Bureau stated, the exchange has “failed to return assets that were in custody to their respective creditors.”
• Trading System Still Offline: Adding to user woes, the FTX Japan trading system remains non-operational.

FTX Japan acknowledged this latest development in a blog post, confirming their ongoing “business improvement plan” submitted to the Kanto Local Finance Bureau on November 16th. They admitted that the platform’s continued inoperability is hindering the quick return of customer assets. This situation highlights the complexities and challenges in unwinding the FTX collapse, especially across international subsidiaries.

Roadmap to Withdrawals: Still a Long Road Ahead?

Just prior to this extension, FTX Japan had released a roadmap on December 1st outlining their plans to resume withdrawals. There was initial optimism, especially given FTX Japan’s earlier assurances that customer assets were separate from the FTX bankruptcy proceedings. The initial target was to resume withdrawals by the end of 2022. However, the extended suspension indicates that this timeline was overly optimistic and the process is proving to be more complex than anticipated.

FTX Japan’s Entry and Exit: A Quick Recap

For those unfamiliar with FTX Japan’s relatively short stint in the Japanese market, here’s a quick timeline:

• Acquisition: FTX acquired the Japanese cryptocurrency exchange Liquid in February 2022.
• Launch: FTX Japan officially launched operations in Japan in June 2022.
• Suspension: Business suspension ordered in November 2022, now extended to March 2023.

This rapid sequence of events underscores the volatile nature of the cryptocurrency industry and the swift impact of the FTX collapse on its global operations, including Japan.

What Does This Mean for FTX Japan Customers?

For users with funds trapped on FTX Japan, the extended suspension brings both frustration and a glimmer of hope. The frustration is understandable – continued delays in accessing your assets are undoubtedly stressful. However, the extension also signals that Japanese regulators are actively working to ensure customer asset protection is prioritized in the FTX fallout. Here’s what you should consider:

• Patience is Key (Unfortunately): The process of asset return is taking longer than initially expected. Continued patience will be necessary.
• Stay Informed: Keep a close watch on official announcements from FTX Japan and regulatory bodies. Monitor news outlets covering the FTX situation for any updates.
• Business Improvement Plan: FTX Japan is working on a “business improvement plan.” While details are scarce, this suggests they are actively trying to address the regulator’s concerns and pave the way for asset returns.
• Regulatory Scrutiny: The active involvement of the Kanto Local Finance Bureau and FSA indicates a strong regulatory focus on protecting Japanese customers. This oversight, while causing delays, is ultimately aimed at a more secure outcome for users.

Looking Ahead

The extension of FTX Japan’s business suspension is a stark reminder of the ripple effects of the FTX collapse. While the situation remains fluid, the commitment from Japanese regulators to prioritize customer asset return is a positive sign. However, the path to resuming withdrawals and returning funds is clearly complex and will require more time. As the March 2023 deadline approaches, all eyes will be on FTX Japan and the progress of their “business improvement plan.” For FTX Japan users, staying informed and prepared for further updates is the best course of action in these uncertain times. We will continue to monitor this situation and provide updates as they become available.