FTX Japan has been ordered to stop its operation in the country following the collapse of the FTX Central Exchange. The crypto firm has been directed to halt OTC derivatives trades and corresponding ledges. Deposits of funds by its customers should not be allowed from November 10 to December 9.
An overview of the Japanese Monetary Regulation Request
The Japanese Financial Services Agency (FSA) has called for the suspension of all FTX Japan financial activities. The suspension was a prompt response to the pause of withdrawals by FTX Trading Limited. The company’s activities are suspicious and need proper evaluation, FSA revealed.
The FSA, on November 10, published corporate litigation against FTX Japan, investigating the recent events of its parent company. Investigations revealed that FTX Exchange suspended withdrawals without clarifying the rationale behind the decision to its investors. The moratorium of FTX Japan was in agreement with the Payment Services Act and the Financial Instruments and Exchange Act.
The FSA stated, ” we have heard that FTX Trading Limited is encountering financial skepticism. There is an urgent need for Japan to ensure that adequate measures are in place. Protection of the interest of its investors is necessary, and this led to the suspension of FTX Japan.”
Requirements Outlined For FTX Japan Operation
The Japanese FSA has declared that FTX Japan lacks the essential structure it needs. The firm’s affiliation with FTX Trading Limited endangers the interest of creditors and investors. Since the firm could not effectively carry out its financial responsibilities, FSA suspended its activities.
The regulatory agency disclosed numerous requirements that FTX Japan would meet before being allowed to operate. First, the firm was mandated to report its liabilities clearly on its balance sheet. Also, the company was authorized to conserve its investments domestically from November 10 to December 9.
In addition, the company was instructed to submit a proposal of how it intends to manage assets. The proposal must contain how the company will safeguard investors’ assets. Also, the firm must release adequate information about the recent crash of its parent company.
FTX Japan was established in June 2022 by FTX Trading Limited to serve Japanese crypto traders. Sam Bankman-Fried served as the interim CEO at the takeoff of the company before appointing a new CEO for the country.
