“Return of Customer Assets” Interview with FTX Japan COO Seth Melamed

FTX Japan Interview

Three and a half months have passed since the bankruptcy of the crypto asset (virtual currency) exchange FTX Trading Ltd.

After careful coordination and response, the Japanese subsidiary “FTX Japan Co., Ltd.” has resumed the withdrawal service of legal currency (Japanese yen) and the withdrawal service of virtual currency from February 21st.

This time, we interviewed Seth Melamed, CEO of FTX Japan. We asked about the outlook centering on the return of customer assets, which will be a turning point in the reconstruction.

connection:FTX Japan to resume cryptocurrency and fiat currency withdrawals from February 21st

Impact of FTX

ーWhat is the current situation of FTX Japan?

We are focused on ensuring a smooth withdrawal process and responding to user inquiries as quickly as possible.

– What progress has been made regarding the return of assets?

Withdrawals resumed at noon on February 21, 2023 Japan time. As of 9:00 a.m. on February 28, Japan time, over 5,400 individual and corporate users have completed withdrawals worth 9.69 billion yen.

The progress of withdrawals and withdrawals is published in the FTX Japan announcement.

Return of customer assets

ーWhat kind of issues did you face in returning assets?

At FTX Japan, our priority was to resume withdrawals from verified accounts as soon as possible, in a safe and accurate manner. The most difficult part was getting data from FTX’s various systems and verifying the accuracy of that data.

– Why was FTX Japan able to return user assets while many other companies in the FTX group could not return them?

As FTX Japan is a legally regulated business operator in Japan, it complies with Japanese regulations, particularly the “separate management” of customers’ crypto assets and fiat currency (Japanese Yen) assets. Fiat currency is stored in a trust account of a designated third-party trust bank, and virtual currency is stored in a separate cold wallet (a highly secure wallet separated from the Internet).

This was a key factor in returning assets to users. We never gave access to anyone outside of the operations team.

All customer assets in FTX Japan and Liquid Japan verified accounts are under the control of FTX Japan.

– What are the conditions for prioritizing asset withdrawal?

Assets will be withdrawn in the order requested by users who meet the pre-set conditions. The conditions include completing the identity verification (KYC) procedure and screening at FTX Japan, opening a Liquid Japan account, and transferring the balance of the FTX Japan account to the Liquid Japan account. It is included.

This prior condition has been communicated to users through our website and email.

Information on withdrawals is published in the FTX Japan announcement.

Examples of assets that cannot be withdrawn

– Why some Japanese users can’t withdraw their assets

Some users residing in Japan have accessed services provided by “FTX Trading Ltd” and overseas affiliates, which are not regulated in Japan.

Users residing in Japan were urged several times to transfer their account balances from overseas FTX exchanges to FTX Japan, and in fact, many users followed the instructions.

If such users completed FTX Japan’s KYC process before November 10, 2022 and transferred their account balance to their FTX Japan account, their assets will be included in the converted balance. increase.

However, assets not transferred to FTX Japan and remaining in accounts for these non-regulated services in Japan are not eligible for return through Liquid Japan.

– Has FTX ever accessed FTX Japan’s user assets?

is not.

-Were assets transferred from FTX to FTX Japan treated differently from assets deposited directly at FTX Japan?

no.

ーWere the assets of Japanese users who used FTX Earn returned?

If you are an FTX Japan customer and have used FTX Earn on a verified account, your FTX Earn balance will be included in your FTX Japan account balance that can be transferred to Liquid Japan for withdrawals.

FTX Earn’s service offerings for FTX Japan users ended prior to filing for bankruptcy in the United States.

ーAbout the future of FTX Japan

Through various experiences for resuming withdrawals, we have gained valuable knowledge and a clearer vision for the future of the platform.

Through interaction with users and stakeholders in Japan and around the world, we were able to improve the industry and identify areas for building a more secure, transparent, and blockchain ecosystem. increase.

We believe that FTX Japan is a testament to our ability to operate cryptocurrency-related businesses while complying with the regulatory, operational and governance requirements that are essential for the future of the industry.