Not every FTX customer lost their assets to Sam Bankman-Fried's alleged fraud. Several highly regulated divisions were not touched, and the FTX Japan unit is the first to return funds.
Unlike millions of other customers of Sam Bankman-Fried's cryptocurrency exchange, FTX Japan users are getting their funds back.
FTX Japan announced that it would open for the withdrawal of both cash and crypto funds at noon local time on Feb. 21.
Apologizing for the "concern and inconvenience caused to our customers due to the suspension of our services," the exchange warned that the expected rush of withdrawals may slow the process.
FTX collapsed in November after it was revealed that some $10 billion of its customers' funds had been transferred — allegedly without permission or legal right — to shore up Bankman-Fried's foundering private trading firm Alameda Research. Some $8 billion appear to have been lost. Several top executives have pleaded guilty to fraud and Bankman-Fried is facing trial on eight counts.
Regulated Funds Segregated
So why are FTX Japan customers getting their funds out now, while almost everything else is locked up in the U.S.-based bankruptcy?
Among other things, its assets were segregated, so FTX was not able to transfer them secretly. According to filings, it had about $205 million in assets and deposits.
Proof Regulations Work
Through a spokesperson, Bankman-Fried told Bloomberg he was "happy to see that the Japanese exchange is moving forward, and continues to maintain that the U.S. entity can and should do the same as soon as possible."
In December, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam cited FTX Japan as proof that strong crypto regulations do work.
Like most of FTX's business units, the FTX Japan exchange itself is up for sale as part of the U.S. bankruptcy.