CySEC Comments on FTX EU Consumer Deposit Withdrawals

CySEC announced on Monday that FTX EU LTD initiated the procedures for customers to request final balances before withdrawing fiat funds from segregated accounts. The market supervisor believes the withdrawal process will go ‘swiftly.’

FTX EU Begins Fiat Currency
Withdrawal Process for Clients

In response
to FTX EU announcing its initiation of processes to return segregated funds to
investors under Cyprus Law, Dr George Theocharides, the Chair of CySEC, stated the
supervisor is glad that regulatory efforts have led to this favorable outcome,
following months of investor uncertainty and concern.

“We
are grateful to the FTX Group Administrators for their collaboration and
support towards these efforts. Safeguarding the interests of investors is of
paramount importance and CySEC will continue to hold FTX EU Ltd to account to
ensure all withdrawal requests are processed swiftly and appropriately,” Theocharides
added.

FTX EU, formerly
known as K-DNA Financial Services LTD, is a European branch of Sam
Bankman-Fried (SBF) US crypto exchange that collapsed a few months ago, in November
2022. When the US branch collapsed, funds belonging to European customers were
frozen to ensure that future claims could be covered and deposits paid out.

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Finance
Magnates exclusively reported last week that FTX EU had launched a website that would
allow FTX EU customers to apply for the withdrawal of funds owed to them.

FTX EU, a solvent entity, is now paying out its customers on https://t.co/MEw8Oz8vTk.

Note: Almost none of FTX’s EU citizens are FTX EU users, because for some reason, FTX EU only onboarded customers registered from March 2022. pic.twitter.com/gu56Vysvlc

— FTX 2.0pium (FTX Creditor) (@AFTXcreditor) March 30, 2023

The
company confirmed the news a day later in an official press note.

FTX EU LTD (Cyprus) (formerly K-DNA Financial Services LTD) is commencing a process for its customers to request final balances on a dedicated website. Read details here: https://t.co/qamNICqGY4

— FTX (@FTX_Official) March 31, 2023

The
information published by FTX EU reveals that the company will provide customers
with a statement of fiat currency balances in accordance with MiFID II regulations.
Following this process, customers of FTX EU, subject to sufficient funds, will
be entitled to withdraw their fiat currency balance as segregated in designated
accounts.

“The
balances will be communicated and verified, and subsequently withdrawal
requests may be submitted through the following website established for this
purpose: ftxeurope.eu. Any withdrawal requests will be subject to customary
know-your-customer and anti-money-laundering checks, and a customer’s
withdrawal may be delayed if bank or other account details have not been
sufficiently verified,” FTX EU commented.

This
announcement pertains only to customers of FTX EU LTD who opened accounts
through FTX.com/eu (i.e., after 7 March 2022) and does not affect customers of
other FTX group businesses, even if located in Europe.

Before the shutdown of FTX.com
international platform, FTX EU operated as a MiFID II-regulated investment
firm offering trading in multi-asset derivatives, particularly with crypto
assets as the underlying. CySEC has suspended its license and ordered FTX EU
LTD to return funds to its customers who request withdrawals. Finance
Magnates’ check on CySEC’s public register shows that the permit is still
under suspension.

FTX EU’s current profile on CySEC register showing the approved domains.

FTX Japan Back on Track

Regulators worldwide
froze FTX affiliates’ funds after the collapse of the US exchange to protect
them from uncontrolled outflows. FTX’s Japanese office resumed withdrawing
client funds in late February through its Liquid Japan platform.

“In
order to proceed with withdrawals, customers who have assets in their FTX Japan
account would need to confirm the balance of their assets and transfer them to
their Liquid Japan account,” the exchange’s official press release added.

Users withdrew $50 million from the $138 million in the branch’s accounts in just one day. Information about the transfer of $157 million
in frozen FTX-linked assets was also reported last week by cryptocurrency
exchange OKX.