FTX Japan, the Japanese arm of the beleaguered crypto exchange FTX.com, has devised a plan to resume customer withdrawals from February next year.
FTX Japan has developed a recovery system that will enable affected users to retrieve their assets via Liquid Japan, which was the first exchange to be officially licensed by the Japan Financial Services Agency (JFSA).
The process will see FTX Japan’s customers will become clients of Liquid by mid-January, and they will have access to their money and assets again from as early as mid- February. Liquid’s handling of the process will kick off after acquiring the client book followed by conducting balance checks.
“We deeply apologize for the big trouble caused by the prolonged suspension of services for the withdrawal of legal currency as well as crypto assets,” FTX Japan said in yesterday’s statement.
FTX completed the acquisition of Liquid Group earlier in February to serve Japanese customers through its new subsidiary. Liquid is a Tokyo headquartered bitcoin and cryptocurrency exchange in Japan. 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 has originally ordered FTX Japan to suspend operations until December 9 and put together a “business improvement plan.” Now, it has additional three months, until March 9, to fulfil the regulator’s orders. The extension comes as the exchange is still unable to return customer assets, with its trading systems continue to be out of function.
Under the orders, FTX Japan suspended over-the-counter derivatives transactions and related margins as well as new deposits. It also informed users that during the suspension period, services relating to new account opening, spot trading, fiat currency deposits, incoming crypto transfers, and derivatives transactions are 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 in a dramatic liquidity crisis that reportedly required $8 billion to resolve. But 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 asset domestically over the same timeframe, properly reporting liabilities on its balance sheet.
The regulator explains that the exchange does not have the necessary structure to provide crypto exchange services in a manner deemed appropriate under the Japanese standards.