In accordance with the directives, FTX Japan will be compelled to halt OTC derivatives transactions, associated margins, and new deposits.
The Financial Services Agency (FSA) of Japan has asked FTX Japan to halt business transactions, citing FTX Trading Limited’s policies. The FSA announced on Nov. 10 that administrative procedures had been launched against the crypto exchange as a result of FTX Trading Limited’s suspension of withdrawals “without explaining the reasons clearly to investors”
” According to the financial regulator, it had issued business improvement and suspension orders in compliance with Japanese law, including the Financial Instruments and Exchange Act and the Payment Services Act.“There have been reports that FTX Trading Limited is facing credit uncertainties,” said the FSA. “It is necessary to take all possible measures to prevent a situation in which the interests of creditors and investors are harmed by the outflow to affiliated companies of the company. Therefore, this situation of our company is not recognized as having the necessary system in place to properly carry out [its financial obligations].”
According to the orders, the crypto exchange must halt OTC derivatives trades, associated margins, and new user deposits from November 10 through December 9 unless the FSA intervenes. The exchange was also required by the financial regulator to hold its assets domestically over the same time period while accurately disclosing liabilities on its balance sheet.
According to the FSA’s business improvement order, the crypto exchange in Japan must submit a plan by November 16 that details how it will safeguard investors and be transparent about the current state of affairs with the crypto exchange:
“Until the implementation of the business improvement plan is completed, monthly progress and implementation status shall be reported in writing by the 10th of the following month.”
After purchasing the Liquid exchange in February, FTX launched FTX Japan in June to serve Japanese cryptocurrency users. FTX Japan was formerly known as the Quoine Corporation. Sam Bankman-Fried, the CEO of FTX, recently apologized for failing to be transparent about the “liquidity crunch” the exchange was experiencing.
He also held the position of Interim CEO of the crypto exchange in Japan at the time of its launch. Although Sam Bankman-Fried claimed that FTX US, a separate legal and business entity from FTX, “was not financially impacted” by the issues facing the major exchange, it is not yet clear how those issues may affect FTX Japan’s operations and business.
