FTX Japan users withdraw funds amid litigation
Due to the large number of FTX-SBF victims, payment is projected to take time.
The continuing dispute between FTX and its co-founder, Sam Bankman-Fried (SBF), has been making a stir in the cryptocurrency market, with many consumers left waiting for a resolution to the conflict between the two parties. In the meanwhile, customers of FTX Japan have made the executive decision to take things into their own hands by withdrawing all of their money.
The problems for FTX started in November 2022, when Binance CEO Changpeng Zhao made the announcement that his company would be liquidating its substantial holdings of FTX Token (FTT). This caused a domino effect that slowed down fund withdrawals across FTX and its subsidiaries. FTX Token (FTT) was the cryptocurrency that Binance held. The statement had a particularly negative impact on the Japanese cryptocurrency trading site Liquid Group, which has been controlled by FTX since February 2022. On November 15, withdrawals were fully halted for the platform.
Moving ahead in time to the 21st of February, FTX Japan commenced withdrawals, although the procedure was not an easy one. In order to complete the withdrawals, cash needed to be transferred from the now-defunct FTX Japan exchange onto an account with Liquid Japan. Despite this, some users saw this as a positive turn of events, and as a result, many of them started withdrawing all of their money from FTX Japan.
Hibiki Dealer, a well-known cryptocurrency trader based in Japan, just reported that they were able to effectively remove all of their cash off the site. Concerns have been expressed regarding the steadiness and dependability of cryptocurrency exchanges as a result of the scenario, even if it is unknown how many users have followed suit.
The volatility nature of the cryptocurrency market highlights the significance of effectively managing risk, which is also brought to light by this episode. It is essential for exchanges to have solid risk management procedures in place in order to safeguard not just themselves but also the users of their platform. In spite of this, it is still unknown how FTX will bounce back from this setback, which is particularly concerning given the current legal dispute with SBF that hangs over the firm.
In conclusion, while the decision by FTX Japan to restart withdrawals was a welcome step for its consumers, the scenario has underlined the issues that face crypto exchanges in a market that is very volatile. Cryptocurrency exchanges must place an increased emphasis on risk management and user safety in order to remain competitive in an industry where consumers are increasingly demanding accountability and transparency.
Image source: Shutterstock
