liquid exchange japan ftx

Japanese Exchange Dragged into FTX Fallout, Suspends Customer Withdrawals

Disclaimer This article is for general information purposes only and isn’t intended to be financial product advice. You should always obtain your own independent advice before making any financial decisions. The Chainsaw and its contributors aren’t liable for any decisions based on this content.

The collateral fallout from FTX’s public implosion continues its relentless course as yet another financial entity associated with the fallen exchange, now in Japan, declares significant interruption to business operations.

In a tweet published Nov. 15, Liquid Global exchange stated that “fiat and crypto withdrawals have been suspended on Liquid Global in compliance with the requirements of voluntary Chapter 11 proceedings in the United States.”

The firm also categorically advised customers against depositing either fiat or cryptocurrency assets until further clarity on the FTX situation arises.

Liquid Global is a trading subsidiary of Quoine Pte Ltd, a Japanese-based firm established in 2014 and listed as one of 134 companies — alongside Quoine Vietnam Co. Ltd and Quoine India Pte Ltd — cited as a debtor in last week’s FTX bankruptcy filing

Quoine was one of Japan’s first exchanges in 2017 to officially register with the country’s Financial Services Agency, and in October 2021 were granted Type 1 Financial Instruments Business registration to engage in the sale and trading of securities and derivatives.

Liquid to iL-Liquid

While the crypto market was still reconciling from the Poly Network hack in August 2021 — which at $602 million stood as the largest DeFi hack on record at the time — just one week later, Liquid Globals’ warm wallets were compromised to the distressing tune of $90 million. 

However, fear not unacquainted readers, as good samaritan Sam Bankman-Fried swiftly arrived on the scene to rescue the day, extending a benevolent debt financing sum of $120 million to Liquid. 

But not only that, FTX followed up the loan by acquiring Liquid Global on Feb. 2 this year in an undisclosed deal with the intention of working together to “provide products and liquidity to retail and institutional investors in the Japanese and global markets.”

At the time of the acquisition, Liquid Global facilitated daily trading volumes of $96.65 million, with their highest performing day of the year coming on May. 12 with $393.4 million, according to statistical data from Nomics.

FTX Japan Under Fire

FTX’s Japanese branch emerged as a direct result of the Liquid Global acquisition this year, and sought to service clients spot and perpetual trading needs throughout the region backed with the regulatory licensing attained by Quoine Corporation. 

At the time, Bankman-Fried stated that alongside a “technological advantage”, the move would allow them to “work directly with Japanese regulators in a transparent, constructive and positive manner.”

However, since FTX filed bankruptcy last week, the Japanese FSA has issued a business suspension order on all trading activities, as well as directing the exchange to maintain assets within the country to the value of its liabilities until Dec. 9.