FTX Japan Gauges Whether Customers Can Get Refunds

The Japanese arm of collapsed cryptocurrency exchange FTX is trying to determine whether the company’s recent bankruptcy will affect its ability to refund digital assets.

FTX Japan is in discussions with attorneys about the implications of the failure of its parent and plans to announce a decision once the situation becomes apparent, a spokesman told Bloomberg Monday (Nov. 14).

Last week, Japan’s financial watchdog ordered FTX Japan to put some of its operations on hold and ensure the safety of client assets. FTX has not responded to a request from PYMNTS for comment.

The move by Japan’s regulator was one of the numerous actions taken by financial oversight groups following FTX’s collapse last week.

Among these countries is the Bahamas, where police and the island Securities Commission have reportedly questioned FTX Founder and former CEO Sam Bankman-Fried about possible criminal conduct tied to the company’s failure.

Bankman-Fried was CEO of FTX until Friday (Nov. 11), leaving his post after a week that saw a run on the exchange’s assets, which led to a liquidity crisis. At first, it seemed like rival crypto trading platform Binance might step in to rescue FTX with an acquisition.

However, Binance abandoned the deal days later in part because of reports that American regulators, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), were investigating FTX.

There were also reports that Bankman-Fried had used FTX customer funds to prop up his sister firm, Alameda Research. Since then, more reports have indicated that some of that money has apparently vanished.

The week also saw The FTX Group companies, which include FTX.com, FTX U.S., Alameda Research, and about 130 other affiliated firms, filing for bankruptcy protection in federal court, and John J. Ray III being named the firm’s new CEO.

Since the collapse, several cryptocurrency companies have begun scrambling to reassure users and put as much distance as possible between themselves and FTX, PYMNTS reported.

Binance, Crypto.com, OKX and Derebit are all among the companies that have recently promised to provide evidence that they have proper reserves to match customers’ liabilities.

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