The Financial Services Agency (FSA) of Japan has requested FTX Japan to suspend business orders, citing the policy of FTX Trading Limited.
In a November 10 announcement, the FSA Say After FTX Trading Limited suspended withdrawals, it took administrative action against FTX Japan “without clearly explaining the reasons to investors.” The financial regulator said it had issued a moratorium and business improvement order under Japan’s Payment Services Act and Financial Instruments and Exchange Act.
“There are reports that FTX Trading Limited is facing credit uncertainty,” the FSA said. “It is necessary to take all possible measures to prevent a situation in which the outflow of funds to the company’s affiliates would harm the interests of creditors and investors. Therefore, this situation in our company is not considered to have the necessary system for proper enforcement. [its financial obligations]. “
According to the order, unless the FSA intervenes, FTX Japan will be required to suspend over-the-counter derivatives trading and related margins, as well as new deposits from users, from Nov. 10 to Dec. 9. The financial watchdog also ordered exchanges to hold their assets domestically within the same time frame and correctly report liabilities on their balance sheets.
The FSA’s business improvement order requires FTX Japan to submit a plan by November 16 that includes how it intends to protect investors and provide transparency for FTX’s ongoing situation:
“Prior to the completion of the implementation of the business improvement plan, monthly progress and implementation should be reported in writing by the 10th of the following month.”
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FTX Japan, formerly known as Quoine Corporation, was launched in June by FTX following its acquisition of Liquid Exchange in February to serve Japanese crypto users. FTX CEO Sam Bankman-Fried, who recently apologized for failing to provide transparency about the “liquidity crunch” the exchange is facing, also served as interim CEO at the launch of FTX Japan.
While Bankman-Fried said U.S.-based exchange FTX US — a commercial entity separate from FTX — “was not financially affected by the issues facing major exchanges,” it’s unclear how FTX’s difficulties might affect it Business and operations of FTX Japan.