FTX Japan Proposes A Plan To Repay User Funds

Snorlax

Dec 2, 2022•2 min read

FTX Japan Proposes A Plan To Repay User Funds

Although it is one of 134 businesses involved in FTX's bankruptcy proceedings, the Japanese subsidiary has been working on a plan to return user funds.

After ensuring that its customers' funds are not included in FTX's bankruptcy proceedings, the Japanese subsidiary of the now-defunct FTX cryptocurrency exchange has released a plan for resuming withdrawals.

On December 1, the company published an update, indicating that it has been able to confirm that the assets of its clients "should not" be part of FTX Japan's estate due to Japanese laws requiring that cryptocurrency exchanges keep client 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 acquiring Japanese cryptocurrency exchange Liquid on February 2, FTX Japan was only launched in June of this year. Its purpose was to serve the Japanese clients of the exchange.

However, due to liquidity problems that its parent firm had in the first few days of November, withdrawals at FTX Japan were stopped on November 8 as well.

A few days later, on Nov. 10, the Financial Services Agency of Japan declared that it had taken administrative action against FTX Japan and had required that it stop accepting new deposits as well as engaging in other business operations while adhering to a business improvement order.

The firm was then included in the list of 134 businesses that made up FTX Trading's chapter 11 bankruptcy filing on November 11 as one of them.

Since then, FTX Japan has stated that resuming withdrawals is their top priority; they plan to do it by the end of 2022.

Since it has now been confirmed that the assets of its users are not included in FTX Japan's estate, this effectively gives them a mechanism to begin user withdrawals.

The firm noted that “Japanese customer cash and crypto currency should not be part of FTX Japan’s estate given how these assets are held and property interests under Japanese law”

The initial draft of FTX Japan's proposal to resume withdrawals has been delivered to Japanese regulators, FTX Japan said, and regular consultations will take place when significant milestones are met.

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