FTX Japan puts sale plan on hold as it mulls a reboot

abdelaziz Fathi

The Japanese subsidiary of bankrupt exchange FTX announced that it has postponed the potential sale process of its business as it explores relaunching its operations.

The exchange’s management stated that, despite significant interest from investors in acquiring FTX Japan, it has decided to halt the sales plan to maximize its valuation and ensure that it can operate efficiently and profitably in the future.

Before the plan works out, the collapsed platform hopes to maintain its dual licensing as a Crypto-Asset Exchange Service Provider and Type I Financial Instruments Business Operator under the Payment Services Act and the Financial Instruments and Exchange Act of Japan.

These licenses are critical to its operations, FTX said, as they enable the company to operate a legitimate spot and derivatives crypto exchange in Japan. It usually takes at least two years to obtain these highly coveted approvals, and only a few operators in Japan have both, giving FTX an edge over many of its rivals.

Meanwhile, FTX is seeking court approval for a Key Employee Incentive Plan (KEIP) that would benefit staffers who were leading its Japanese subsidiary’s operations. The KEIP aims to motivate and retain key personnel who are essential in maximizing the value of the subsidiary, and it will only be activated if the sale of the subsidiary falls through and FTX Japan resumes operations.

The plan proposes up to two payments of around $950K, with the majority of the amount going to the subsidiary’s chief operating officer, chief product officer, chief financial officer, head of operations, chief compliance & risk officer, data scientist, and front-end engineer.

“The KEIP Participants have the institutional knowledge, specialized skillsets, and critical relationships with regulators and Company employees that are necessary to maximize the going concern value of the Company or to restart the Debtors’ exchange,” the statement reads.

The development comes barely two months after FTX Japan started allowing customers to access their assets. In February, around 7,026 users moved 6.6 billion yen from their exchange accounts to Liquid, a relatively quick reboot compared to customers in other countries where they are a long way from getting access to their fund.

FTX Japan laid out a timeline for the restoration of customer funds and resume asset withdrawals. The exchange developed a recovery system that enables 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).

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