FTX Japan, the Japanese subsidiary of now-bankrupt cryptocurrency exchange FTX, is reportedly planning to resume withdrawals by the end of the year. Talking to local broadcasters on Nov. 21, an FTX Japan executive, speaking on condition of anonymity, revealed that the company is studying how to resume withdrawals by the end of the year. The developments follow Japan’s Financial Services Agency (FSA) taking administrative action against FTX Japan on Nov. 10 after its parent company halted withdrawals without any clear explanation to investors.
According to Japanese news site NHK, an FTX Japan executive said its clients are currently unable to withdraw assets because FTX Japan’s system is linked to the wider FTX system. To solve this problem, FTX Japan is developing a separate system so that its clients can withdraw funds.
Therefore, FTX Japan will develop its own system to allow customers to withdraw funds. The company held about 19.6 billion yen ($138 million or about 11.2 billion rupees) in cash and deposits as of Nov. 10, when Japan’s Financial Services Agency (FSA) ordered the exchange to suspend operations.
The development comes 48 hours after FTX announced the sale and restructuring of some of its companies to recover funds used to return user assets. FTX Japan is also expected to be one of these companies, although no confirmation on this has been received.
The move by FTX will bring some benefits to its creditors, whose claims amount to more than $1 million, according to its previous court filings. According to another court filing, the top 50 of these creditors alone owe nearly $3.1 billion (roughly Rs 25,166 crore) in total.
Japan’s financial regulator issued several orders to the exchange – one to suspend operations, another to hold assets domestically and the last to improve operations. The FSA directed the firm to suspend over-the-counter derivatives trading and accepting customer deposits because of credit issues with FTX.
“In this context, there are reports that FTX Trading Limited is facing credit uncertainty. It is necessary to take all possible measures to prevent the interests of creditors and investors from being damaged due to the flow of funds to the company’s affiliates,” the regulator said in November wrote on the 10th.
On Nov. 11, FTX Group, along with 130 affiliated entities, filed for Chapter 11 bankruptcy protection after failing to boost liquidity. Since then, clients have been unable to withdraw assets due to ongoing bankruptcy proceedings.