FTX Japan has until March to return customer assets

abdelaziz Fathi

The Kanto finance bureau of Japan’s Ministry of Finance (MoF) said it will extend its business suspension order for FTX Japan, the Japanese arm of the beleaguered crypto exchange FTX.com.

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.

In a blog post, FTX Japan confirmed the news and noted that its platform remains halted, adding that it’s “not possible to quickly return customer’s assets.”

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.

Since 2017, Japan has been one of the first nations in the world to make it mandatory for crypto companies to properly register with the regulator in order to continue operating. However, Japanese authorities are proposing new restrictions that would bring crypto exchanges under the purview of its Foreign Exchange and Foreign Trade Act.

The move comes as Japan wants crypto businesses not to process transactions involving crypto assets subject to asset-freeze sanctions against Russia over the war in Ukraine.

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