This FTX subsidiary with $146,000,000 in customer funds might be able to pay back its customers. And it's all because of smart regulations. Let me explain:
FTX Japan is the only subsidiary of the worst exchange since the Barter system to be able to repay customer deposits.
It’s because they’ve been through this before. Actually, twice before.
FTX Japan was the 3rd big crypto exchange that blew up in Japan after:
• MtGoX: In 2014 hackers stole ~800k BTC worth $400 million
• Coincheck: In 2018 hackers stole 520 million NEM coins worth $500 million
So, what did Japan learn from these experiences ？blow-ups that they used to make sure another exchange doesn’t screw up?
4 things:
Separate customer Fiat and crypto funds from Exchange funds.
Here’s how much FTX Japan held:
· 3,194 BTC [$56 million]
· 16,418 ETH [$21 million]
· 64.1 million XRP [$25 million]
· 6 billion JPYfiat currency [$44 million]
2. Customer fiat funds held by a 3rd party.
FTX Japan didn’t hold the customers’ funds directly. They held it through a 3rd party like a bank.
SBF couldn’t hit up FTX Japan and say, “Hey JAPAN, you have customer funds. And we want to YOLO it to Alameda. Pls send ASAP!”.
3. If a Japan exchange goes down, customers are paid first.
4. 95-5% fund split.
Japanese exchanges are forced to keep:
• 95% of crypto funds in cold wallets
• 5% of crypto funds in hot wallets (but each crypto in the hot wallet is backed 1-for-1 in the cold wallet)
This way there ain't no back door for SBF to access customer money.
The Crypto Needs Regulation？
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0%No
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