- FTX Japan users can look forward to having their funds returned to them in the coming weeks
- Japanese regulations meant that user funds were segregated from the exchange’s money
- Sam Bankman-Fried commingled user funds and traded with them through Alameda
FTX Japan customers can look forward to getting their funds back from the Japanese wing of the defunct exchange after FTX Japan yesterday announced plans to return users’ assets through its sister exchange, Liquid. The exchange released a roadmap detailing the process, which includes sending users emails with instructions for withdrawing their funds directly from Liquid, nearly two months to the day since allegations of impropriety first emerged about its parent company.
FTX Japan Deposits Match Reported Balances
Users of FTX Japan are able to retrieve their funds thanks to the protections provided by Japanese financial laws which require cryptocurrency exchanges to segregate customers’ deposits. The Japan Financial Services Agency ordered FTX Japan to halt business operations amid the FTX crisis last month, with the exchange assuring users that their assets in its cold wallet exceed the amount held in custody, something that should be the most basic equation that exchanges operate with:
For the assets entrusted to us by our customers at FTX Japan and Liquid Japan, we are proceeding with system development so that withdrawals and withdrawals will be possible from the Liquid Japan web version. Specifically, you will be able to check your FTX Japan balance from the Liquid Japan web version, and then you will be able to withdraw/take out.
Regulations Saved Users
The upshot of this ruling is that users of the exchange in Japan were not affected by the mismanagement of funds by the then CEO, Sam Bankman-Fried. The stark contrast between FTX Japan and the wider FTX company highlights the importance of clear regulatory measures to protect users of cryptocurrency exchanges.
FTX Japan users who do not have an account with Liquid will receive a registration link by email, after which they will be able to transfer their funds from FTX Japan to their Liquid accounts.
