FTX customers in Japan can now start withdrawing funds from the bankrupt crypto exchange. It’s the first time FTX crypto investors have been able to recover money locked in since November. The crypto exchange’s Japan subsidiary said users can transfer crypto and fiat to the Liquid platform from Tuesday.
FTX, once the third-largest cryptocurrency exchange in the world, went bankrupt in 2022. Its founder Sam Bankman-Fried faces fraud charges and is currently being tried in the US. Last week, Bankman-Fried attended the court in Manhattan. He had pleaded not guilty to fraud charges. The hearing that took place last week came after prosecutors asked US District Judge Lewis Kaplan to ban Bankman-Fried from using the internet except to review evidence against him or use email on his Gmail account, citing his use of a virtual private network (VPN) that could have let him hide some online activity.
Kaplan had already banned Bankman-Fried from contacting current or former employees at his now-bankrupt exchange and Alameda Research hedge fund, and from using encrypted messaging apps such as Signal that let users auto-delete messages. Bankman-Fried’s communications became an issue when prosecutors said he sought to contact FTX’s current chief executive John Ray, and an in-house lawyer.
We would like to express our deepest apologies,” FTX Japan stated in a blog post. “The bankruptcy of our parent company […] has had a wide range of impacts, and we have had to wait for a long time to resume operations.”
FTX Japan warned that the withdrawal process may become bogged down by a large volume of customers submitting requests at once. On December 1, the platform held around $94.5 million in crypto and $46 million in fiat currency. Though customers of FTX Japan will soon see some reprieve, customers who did business with other subsidiaries of FTX, like FTX.US, remain in limbo as the international exchange works its way through bankruptcy proceedings in a Delaware court.
FTX filed for bankruptcy in November of last year after a run on the exchange was triggered by a steep drop in the price of the exchange’s native cryptocurrency FTT. As assets flowed out of the exchange, it revealed FTX did not have one-to-one reserves of customer assets, could not honor withdrawals, and forced it to file for bankruptcy. Bankman-Fried was later arrested and charged with a litany of financial crimes, such as wire fraud and conspiracy to commit money laundering, to which he has since pleaded not guilty.
FTX Japan launched in June of last year and operated for less than six months before Bankman-Fried’s companies collapsed. Bankman-Fried was appointed as the company’s interim CEO when the subsidiary launched. “Japan is a highly regulated market with a potential market size of almost $1 trillion when it comes to cryptocurrency trading,” Bankman-Fried stated last June
Just a day after resuming funds withdrawals, FTX Japan revealed that roughly $50 million (6.6 billion yen) was taken out from Liquid Global. While a community member responded to the development by saying, “Congratulations on your escape !” many are yet to witness a total redemption of their funds. The reimbursement process is expected to come with delays due to the sheer number of users impacted by the FTX-SBF fiasco.