BitFlyer Holdings Poised to Acquire FTX Japan Amid Bankruptcy Proceedings

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The parent firm of one of the top cryptocurrency exchanges in Japan, BitFlyer Holdings, is planning to acquire the Japanese division of the defunct cryptocurrency trading platform FTX. This deal, which has been quietly progressing, is now in its final stages and is expected to have substantial financial implications.

BitFlyer and FTX Hold Talks

According to a report from Nikkei, BitFlyer Holdings is in advanced negotiations to purchase FTX Japan. The company plans to acquire all shares of FTX Japan and take over its business operations. After the deal completion, FTX Japan is expected to shift its focus towards crypto asset management and custody services, targeting institutional investors as its primary user base.

The deal is reportedly valued in the billions of Japanese yen, translating to tens of millions of dollars, and reflects the market value of FTX Japan. This acquisition is delicately linked to the ongoing bankruptcy procedures of FTX in the United States.

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Background Details

FTX Japan was launched in June 2022, just five months before the collapse of its parent company, FTX. The acquisition of the fintech business Liquid Group and its operational subsidiaries, notably Quoine Corporation, one of the first bitcoin exchanges in Japan, made this launch possible. FTX gradually integrated its products into Quoine’s offerings, transforming the company into its Japanese subsidiary.

However, in November 2022, the FTX Group filed for bankruptcy, prompting Japanese authorities to pause withdrawals and suspend FTX Japan’s operating license. Despite the parent company’s financial turmoil, FTX Japan stated that its customer assets were separate from the bankruptcy proceedings and assured users that their funds would be returned.

FTX Collapse and Resumption of Withdrawals

After months of legal and financial maneuvering, FTX Japan resumed withdrawals in late February, using the local crypto exchange Liquid to process user requests.

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This resumption followed a U.S. court ruling by Judge John Dorsey, who approved FTX’s motion to sell several of its units, including FTX Japan, Embed, LedgerX, and FTX Europe. At that time, 41 global entities expressed interest in acquiring FTX Japan, but BitFlyer Holdings emerged as the frontrunner.

The sale of FTX Japan has advanced, but the FTX Group as a whole still faces formidable obstacles in its bankruptcy process. The platform’s planned reorganization plan was rejected by FTX’s creditors due to several sections of the Bankruptcy Code not being followed. Property rights and the coherence of debtor liquidation analysis are two examples of these.

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