Following the collapse of FTX exchange on November 11th, when the FTX Group filed for bankruptcy protection in the US, Japan’s regulators have suspended the platform’s local branch, FTX Japan. Furthermore, they have also decided to retain its assets within the country, noting that it is necessary to take all possible measures to ensure that the assets do not flow out to overseas affiliates. That way, the interests of the local users in Japan would not be harmed. Now, the regulators decided to extend the suspension until March 9th, 2023.

Japan’s regulators took action against FTX Japan

The announcement was posted by the Japanese Financial Services Agency (FSA), which said that the country’s Kanto Local Finance Bureau was the one who made the decision. The FSA posted the announcement yesterday, December 9th, noting that the suspension could be reversed before March, provided that a new system is developed, capable of properly conducting the FTX subsidiary’s operations.

Not only that, but the regulators demand that the system, if it should be developed, gets subjected to its own inspection and confirmation before they reverse the decision.

Originally, the regulator ordered the suspension of the platform’s operations until December 9th, which was yesterday. This came after the collapse of the main platform, based in the Bahamas. The investigation of the incident led the authorities to believe that the exchange has been mishandling customer funds.

However, the Kanto Local Finance Bureau is willing to revert its decision under specific circumstances, as mentioned. In fact, it tasked FTX Japan with submitting a plan for business improvement, requesting that the platform delivers it by November 16th. So far, however, the order has remained in place, and it will remain until March 9th, unless if the exchange comes up with the requested system.

Meanwhile, the regulator will continue working towards bringing back withdrawal services on the Japanese branch of the FTX exchange. It noted that it is unable to provide a specific date when these services might reopen at this time, but it will do everything in its power to make it happen as quickly as possible. All new transactions will be suspended for the time being, however.

FTX collapse has sent shockwaves throughout the industry

The collapse of the FTX exchange and FTX Group’s bankruptcy protection filing affected a lot more than just the main platform. It also affected the exchange’s subsidiary in the US, FTX.US, as well as the Hong Kong-based subsidiary Alameda Research Limited. Apart from those two, it is estimated that around 130 additional affiliated companies were also strongly impacted, FTX Japan being only one of them.

For the moment, FTX is undergoing civil and criminal investigations in the Bahamas, with a similar action in the US. The authorities of the Bahamas have seized the exchange’s assets, while the platform also lost its licenses issued by the governments of Cyprus and Australia.