The Japanese subsidiary is one of 134 companies caught up in FTX bankruptcy proceedings but has been drafting a plan to return client funds.
After ensuring that its customers’ assets are not included in FTX’s bankruptcy proceedings, the Japanese division of the now-defunct FTX cryptocurrency exchange released a plan for starting withdrawals again.
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 included in FTX Japan’s estate due to Japanese laws requiring cryptocurrency exchanges to keep client funds separate from their own assets.
The legal team 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 established in June of this year. Its purpose was to assist the Japanese clients of the exchange.
However, withdrawals at the Japanese cryptocurrency exchange were stopped on November 8 in a manner identical to that of its parent firm due to liquidity problems experienced by that company in early November.
A few days later, on Nov. 10, the Financial Services Agency of Japan declared it had taken administrative action against the crypto exchange in Japan and ordered it to stop accepting new deposits and comply with a business improvement order, among other business operations.
The business 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 re-enabling withdrawals is its main priority, and it is apparently hoping to do it by the end of 2022.
Since it has recently been confirmed that the assets of its users are not included in FTX Japan’s estate, this effectively gives them a way to resume user withdrawals.
“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 firm noted.
FTX Japan said its management is in regular dialogue with Japanese regulators and has sent through the first draft of their plan to resume withdrawals, suggesting regular consultations will occur “as key milestones are met.”
