TOKYO/WASHINGTON – Japan’s government has ordered FTX.com’s local subsidiary to suspend some of its operations, while the Bahamas Securities Commission has frozen the assets of FTX Digital Markets and “related parties”, as the crypto platform company teeters closer to collapse.
Japan’s Kanto Local Finance Bureau has instructed the FTX unit to pause client services until Dec 9, according to a statement released on Thursday. The company is not allowed to accept new assets from clients over that period.
“We need to do everything possible to protect the interests of FTX Japan’s users,” Finance Minister Shunichi Suzuki said at a news briefing on Friday. “It is extremely regrettable that the situation has come to this.”
Mr Suzuki said Japanese law requires crypto exchanges to manage user assets separately from their own, which provides a certain amount of protection to users.
FTX’s decision to halt clients’ asset withdrawals means it does not have the necessary structure to provide crypto exchange services in a manner deemed appropriate under domestic standards, the regulator said. The government has asked the company to submit a business improvement plan by Nov 16.
Meanwhile, the Bahamas Securities Commission said on Thursday that an asset freeze was “the prudent course of action” to preserve assets and stabilise the company. An attorney has been appointed provisional liquidator as the securities regulator seeks to place the beleaguered crypto exchange into receivership.
“The commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research. Based on the commission’s information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful,” it said.
The moves come on the heels of a wild week for FTX and founder Sam Bankman-Fried. It included a takeover offer from rival exchange Binance that was pulled a day later, the threat of bankruptcy without a multibillion-dollar cash infusion and the shuttering of Alameda Research, the trading house at the heart of his digital asset empire.
FTX Digital Markets is the Bahamian subsidiary of FTX Trading, operating as FTX.com. The exchange is based in the Bahamas and is a separate legal entity from FTX US.
Representatives for FTX.com and Mr Bankman-Fried did not immediately respond to a request for comment.
Investors are becoming increasingly anxious over the blurred lines among Mr Bankman-Fried’s business interests, as evidenced by what is transpiring at his United States-based crypto exchange.
Employees of FTX US are in talks about selling parts of the business, including some assets that Mr Bankman-Fried amassed on a sweeping acquisition tear across the industry, according to two people with direct knowledge of the matter, who requested anonymity because the talks were private.
Those employees, in some cases without Mr Bankman-Fried’s participation, are pitching assets including stock-clearing platform Embed and naming rights to an arena in Miami, one of the people said.
FTX US on Thursday said customers should close out any positions they want to and that trading may be halted in a few days. BLOOMBERG
