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FTX Japan says work underway to allow withdrawal of client funds

The Japanese subsidiary of failed crypto empire FTX said it is working to allow users in the country to withdraw their funds, paving the way for a rare case of investors getting money back from the collapsed exchange.

The plan for the resumption of withdrawal services, which were first suspended on November 8, has been approved by the new FTX Trading management team, according to an update on its website on Thursday. As part of the plan, the firm is incorporating controls, security audit, reconciliations, and reviews.

Sam Bankman-Fried’s sprawling tangle of FTX group companies slid into a chaotic bankruptcy on November 11, potentially bilking more than a million creditors around the world and fomenting turmoil in the crypto sector. In Japan, the financial regulator has been seeking a road map and timeline for the return of customer assets as soon as possible, Bloomberg News reported this week.

FTX Japan customer balances would be transferred to Liquid, a platform it bought this year to boost its local presence, after a verification process so that users can withdraw their money, people familiar with the matter had said. FTX Japan K.K. currently holds about $94.5 million in crypto assets and $46 million in fiat currency in designated client accounts.

FTX Japan said it has confirmed with the law firm representing the FTX group in the Chapter 11 bankruptcy proceedings that Japanese customer cash and crypto currency should not be part of FTX Japan’s estate. The local unit plans to resume withdrawal service in the ordinary course on this basis, according to the statement.

The management of FTX Japan is in regular dialogue with the country’s regulators, and has shared the first draft of the plan with more consultations happening on a regular basis as key milestones are met, the statement said. The private keys of the asset segregated wallets are kept offline at all times and are solely under the control of the Japan operations team, it added.

© 2022 Bloomberg


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