According to reports, FTX Japan, the Japanese subsidy of the now-bankrupt crypto exchange FTX, plans to resume withdrawals by the end of the year. A representative of FTX Japan, who refused to be identified, revealed to a local broadcaster on November 21 that the company is working on resuming withdrawals before the year ends. The development comes after the Financial Services Agency of Japan (FSA) took administrative action against FTX Japan on November 10 after its parent company halted withdrawals without providing investors with any explanation to investors.
According to a report from the Japanese news site NHK, The FTX Japan executive said its customers cannot withdraw assets at the moment due to FTX Japan’s connection to the broader FTX system. To rectify this issue, FTX Japan is developing a separate system so its customers can withdraw their funds.
FTX Japan is thus going to develop its own system, which will allow customers to make their withdrawals. The company held about 19.6 billion yen ($138 million) in cash and deposits as of November 10, when Japan’s Financial Services Agency (FSA) asked the exchange to suspend operations.
This development comes 48 hours after FTX’s announcement of selling and reorganizing some of its companies to recoup funds for returning users’ assets. FTX Japan is also expected to be one of those companies, although no confirmation about the same has been received yet.
This move by FTX would be of some benefit to its creditors, which its previous court filings reported to be in the amount of more than one million. According to another court filing, the top 50 of these creditors alone are collectively owed almost $3.1 billion.
The Japanese financial watchdog issued a number of orders to the exchange – one for the suspension of businesses, another for the holding of assets domestically, and the last for the improvement of business practices. FSA instructed the firm to suspend over-the-counter derivative transactions and the acceptance of customer deposits, as FTX had credit issues.
“Under these circumstances, there have been reports that FTX Trading Limited is facing credit uncertainties. 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,” the regulator wrote on November 10.
On November 11, FTX Group, alongside 130 affiliated entities, filed for Chapter 11 bankruptcy protection after failing to raise liquidity. Since then, customers have been unable to withdraw assets as bankruptcy proceedings are ongoing.