Press Conference by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services

(Excerpt)

(Friday, November 11, 2022, 9:22 am to 9:46 am)
 

[Questions and answers:]

Q.

Last night, we noticed that an Order to Suspend its business and to Improve Business against FTX Japan Inc., a crypto-asset exchange service provider.
Since the announcement was made at very late time, I wonder what the background of this decision is and there is any reasons to take such emergent actions.

A.

The Kanto Local Finance Bureau took administrative actions against FTX Japan Inc. including an Order to Suspend Business.
Regarding this action, FTX Trading Ltd., the parent company of FTX Japan Inc., was said to be faced with credit uncertainty, and given FTX Japan Inc.’s capital and business relationship with the parent company, we considered that FTX Japan Inc. should immediately suspend new transactions with users, and we believed that we need to take all possible measures in order to ensure that the interests of users are not harmed by the outflow of their assets to its affiliated both domestic and foreign companies.
We also considered that there were deficiencies in the system for business execution of FTX Japan Inc. as it stopped users from making withdrawals without a clear explanation of the reason. Thus, yesterday, we took administrative actions such as an Order to Suspend Business.
It is extremely regrettable that this situation has occurred.
As a financial authority, we will closely monitor developments to ensure that FTX Japan Inc. take appropriate measures for the protection ofusers such as preserving user assets.
I think it does not mean that the announcement by the Kanto Local Finance Bureau was intentionally delayed. It just published the announcement following the usual process.

Q.

There are moves to freeze assets of FTX Trading Ltd. in foreign jurisdictions.
Regarding FTX Japan Inc., is such an action under consideration in Japan?

A.

Regarding the issue with FTX Japan Inc., under the Payment Service Act and the Financial Instruments and Exchange Act, a crypto-asset exchange service provider is required to take measures for user protection such as segregating and managing users' assets from its own assets.
At this stage, we will closely monitor the development of FTX Japan Inc.’s actions.
Going forward, we will work to ensure the establishment of systems for user protection at crypto-asset exchange service providers.
In Japan, these two laws require those providers to take a certain level of user protection measures.
That is my understanding.