Japanese regulators suspend FTX Japan’s operations

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Japan’s financial regulators have ordered a Japanese subsidiary of the cash-strapped crypto exchange FTX to suspend operations for one month in the wake of the company’s liquidity crisis.

The Kanto Local Finance Bureau took the administration action against FTX Japan on November 10, demanding the company improve its business and suspend operations for a month.

The order came after FTX Japan suspended withdrawals of crypto assets and legal tender on its platform, citing its policy. The decision led to widespread concerns, with many customers expressing their frustration on Twitter, that they might not be able to get their assets back.

The finance bureau’s order was issued for FTX Japan’s suspension of legal tender and crypto asset withdrawals without providing clear reasons to users and without specifying a resumption schedule, while continuing to accept assets from users and conduct crypto asset transactions.

In response to the disciplinary action, FTX Japan on the same day announced suspending new account opening, cash transactions, deposits of legal tender and crypto assets, as well as new perpetual and quarterly futures transactions and deposits of margin and other funds related to those derivatives transactions.

FTX filed for bankruptcy proceedings in the U.S. on November 11 in the culmination of dramatic events in recent weeks. A large number of customers tried to withdraw funds from FTX last week over rumors that the digital asset exchange was short of cash. 

Its former chief executive, Sam Bankman-Fried, once had a glimpse of hope when rival platform Binance studied a bailout plan last week. Binance eventually axed the plan as a result of “corporate due diligence”  and reports about FTX mishandling of customer funds and other allegations.