The country’s regulators have ordered FTX Japan to suspend operations following the platform’s move to halt withdrawals earlier this week. The Japanese Financial Services Agency (FSA) stated on Thursday on “Administrative action against FTX Japan Co., Ltd.”
According to the statement, FTX Japan Co., Ltd was requested by the Director-General of the Kanto Local Finance Bureau “to comply with Article 63-17 of the Payment Services Act.” The statement read:
“Business suspension orders and business improvement orders based on the provisions of Paragraph 1 and Article 63-16, and domestic asset holding orders based on the provisions of Articles 56-3, 52-1 and 51 of the Financial Instruments and Exchange Act, A business suspension order and a business improvement order were issued.”
The FSA wants the FTX Local Division in Japan to halt the provision of its crypto asset exchange services and stop signing up new customers until December 9, with immediate effect, the official statement said.
The order comes even as the Bahamian cryptocurrency exchange continues its downward spiral after it temporarily stopped withdrawals due to a liquidity crunch associated with the unhealthy financial status of its sister company, Alameda Research.
The Japanese regulator says it has taken this move because FTX Japan stopped withdrawals for customers in the East Asian country without specifying a date for commencement while at the same time continuing to register new customers. The regulator also said that FTX Japan’s financial health was uncertain under the current circumstances.
The FSA statement added, “It is necessary to take all possible measures to prevent a situation in which [Japanese customers’ assets] are leaked to an [foreign] affiliated company.”
The regulator is also seeking to protect Japanese customers whose investments are at risk under the current circumstances. The order also outlines requirements that the FTX Japanese arm should comply with, specifying the need for a “written business improvement plan” by November 16, 2022.
Accompanying the suspension order is a “business improvement order,” which requires FTX Japan to accurately identify users through enhanced Know Your Customer (KYC) processes, strive to protect users’ investments, and “appropriately disseminate information to users regarding the protection of their assets.”
FTX’s Misfortunes Continue
It is a low moment for the cryptocurrency market as FTX continues its downward spiral. Moreover, the week has been devastating for FTX, its customers, and SBF, as there seems to be no end to the bad news.
With its survival hanging on a cliff due to a liquidity crunch, the crypto exchange was hoping to be rescued by rival Binance, only for the latter to back out after carrying out its due diligence.
As if that was not enough, Tether, the company behind the world’s largest dollar-pegged stablecoin by market capitalization USDT, has frozen an address associated with the embattled crypto exchange FTX holding $46 million worth of Tether USD tokens, following a law enforcement request.
Moreover, the platform’s native token, FTT, continues to be devalued after plummeting as much as 96% over the last five days from $26, reaching lows around $1.07 on Wednesday. FTT’s market cap has dropped 90% from just over $3.2 billion to the current value of around $306,042,785, according to data from CoinMarketCap.
As such, the order to suspend operations in Japan solidifies the already dire state FTX is in.
On the upside, FTX supporters may be bolstered by the news that Tron’s founder Justin Sun has come to the rescue of the crypto exchange, giving FTX a lifeline. There is news of the business coming back online and resuming withdrawal operations.
Will FTX get out of this hole? Well, it remains a wait-and-see situation.