Days after a promised refund, some FTX Japan users are still waiting for their money

On Tuesday, FTX Japan, a subsidiary of FTX, began allowing customers to withdraw funds frozen in the now-defunct crypto exchange. Transfers for Japanese customers started being processed later that day, making them some of the first FTX users in the world to get their money back.

Many of these customers are now breathing a sigh of relief, after four months of alarm and uncertainty. In the mad rush to claim these withdrawals, however, others have run into hurdles, and taken to Japanese social media to share their accounts. Some users are being told they aren’t eligible for withdrawals at all. Rest of World spoke to seven FTX Japan customers, most of whom say they feel like they’ve fallen victim to a bait-and-switch.

Yakiginnan, who asked to use his social media name to protect his privacy, is a 48-year-old working in asset management. He is one of the many customers to successfully complete his withdrawal. He had roughly 2 million yen ($14,800) in bitcoin with FTX Japan, which was returned in full on Wednesday. Instead of celebrating, though, he has spent the last few days contacting FTX Japan’s customer support on behalf of those who haven’t seen a dollar.

“I am very angry because I know that there are many people, including my daughter, who were denied the return of their assets,” he told Rest of World. “And I am angry that FTX Japan has been falsely announcing that the assets are segregated and properly protected, when, in fact, they were not.”

Rest of World joined one Discord group this week that had over 50 victims of FTX. Using public Twitter accounts, many members of the community are now pushing for clarity from FTX Japan on why customers still haven’t been able to withdraw, and have demanded a closer investigation from Japan’s Financial Services Agency (FSA).

FTX Japan did not answer questions from Rest of World about why some customers have been denied their withdrawals. In a blogpost published on February 22, the company announced it had issued withdrawals of more than 6 billion yen ($49 million) to 3,454 individual accounts and 94 corporate accounts in the first two days.

The FTX saga began in early November 2022, when Sam Bankman-Fried’s massive crypto exchange collapsed following allegations that the company had severely mismanaged customer assets. FTX Japan was one in a web of international FTX subsidiaries. But, unlike other subsidiaries, FTX Japan was under the purview of strict Japanese crypto regulations. As a result, the company claimed that the exchange was still solvent.

It’s taken FTX Japan four months to restart withdrawals, which required an ambitious plan overseen by Japanese regulators to sidestep the now-defunct FTX system. Rest of World previously reported on the plan’s unique challenges, which entailed reviving an exchange discontinued in Japan — called Liquid.com — to deliver withdrawals.

Meanwhile, FTX Japan has issued updates to customers claiming that the exchange was solvent and explaining how Japan’s notoriously strict regulations, including restrictions on the movement of customers’ assets, have insulated users from the wholesale losses of FTX users elsewhere.

Yakiginnan says his daughter has roughly 200,000 yen ($1,480) in FTX. But when she applied for her withdrawal through Liquid.com, she received a notification that she was ineligible to complete the transaction. In fact, she was told her assets weren’t managed by FTX Japan at all, but rather by its parent company, currently in the midst of bankruptcy proceedings.

Many customers have taken to social media to share screenshots of similar notifications. Some had used FTX International’s exchange website, FTX.com, or  the FTX app prior to FTX Japan’s official launch in June 2022. They are being told that they did not successfully transfer their assets after the June launch.

One customer, who asked to remain anonymous over privacy concerns, told Rest of World he has lost almost all the assets he had saved since 2014 — nearly $140,000 —  due to the FTX collapse. Initially an FTX app customer, in May 2022, he conducted a Know Your Customer (KYC) check to verify his identity, he thought, for FTX Japan. FTX Japan claims that since he did not complete an additional KYC check after June, his assets were never transferred properly, despite his registration with the subsidiary and the fact the  domestic app was branded as FTX JP at the time, he said.

“My biggest concern is that I will be recognized as an FTX.com user by FTX Japan and as an FTX Japan user by FTX.com, leaving me hanging in the balance,” he said.

For many, the sudden disclosure that their assets were never managed by FTX Japan, after months of messaging from the subsidiary that they had been protected from the fallout, has come as a shock.

Yakiginnan says his daughter opened her account using the FTX JP app, so there should be no need to transfer the account from FTX International.

Others, though, still aren’t sure why withdrawals aren’t coming through. Initial restrictions and delays on the withdrawals of both Bitcoin and Ripple cryptocurrencies appear to have mostly been resolved. But Wagami, a computer graphics designer who asked to use only her last name to protect her privacy, told Rest of World she still receives error messages when she tries to apply for a withdrawal. “There are people with the same status who are able to withdraw and people who are not able to withdraw. It is very frustrating because I don’t know why I can’t,” she said.
“I would like to see an investigation into the cause of the problem and a response from FTX as soon as possible,” said Wagami. “I can’t say yet if I will get a refund, but I believe I will. That’s my only option.”