[2023-02-21] FTX Japan allows customers withdraw their funds

NeuroticFish

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Quote from: Kakmakr on March 12, 2023, 05:14:42 AM

So where was the insurance companies when Bernie Madoff stole their funds? He operated in a fully regulated financial system

They're exactly in "the same place" where they were when FTX US and so on were made: waiting a sign from the new company, but that has never came.
You said it yourself: fully regulated. If the regulations don't ask for compulsory insurance, the bank or exchange will not buy that. And that's exactly what we have with FTX everywhere else than Japan. I'd say the same was with Madoff (although I didn't care to read all the details of that scam).

Kakmakr

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So where was the insurance companies when Bernie Madoff stole their funds? He operated in a fully regulated financial system and managed to steal $64.8 billion from his investors. Roll Eyes

What about Wirecard, a German electronic payments company, where roughly $2 billion were stolen through the falsifying of the financials over a period of 20 years. (Where were the regulators?)

There are many more examples of companies that operated in a regulated environment..and where millions were stolen under the regulators noses. (Enron / Wells Fargo / WorldCom / ZZZZ Best / Steinhoff etc....) Roll Eyes

NotATether

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While idiots around the world are calling for crypto to be banned after these bankruptcies, there are absolutely zero requests to make an insurance policy for exchanges.

Fintechs are not allowed to hold your money themselves - a bank must do it for them. Similarly, exchanges should not be allowed to have custody over your funds, instead a traditional bank should be holding them (in the original cryptocurrency, but it would require that those dinosaurs make a more modernized infrastructure).

NeuroticFish

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Quote from: stompix on February 21, 2023, 03:40:42 PM

So, now that we have a few names that have fled Japan over these regulations that are now proven to protect customers, won't this be a good time for users to drop them? I remember a guy that shouts #SAFU all day but when it came to obeying these laws it choose to #RANU Grin

That insurance is an expense many companies don't want to have. Even more, the crypto space used to pretty much cheer for not obeying regulations, which most often came with compulsory KYC (which now is pretty much a rule, but not so long ago it was the exception).
Binance was hacked and managed to recover from their own funds. This gave CZ quite a morale boost and few understand that those funds are good only in case of hacks, but won't help in case of bankruptcy, especially if that's due to running on fractional reserves.

Quote from: bitmover on February 21, 2023, 09:54:08 PM

FTX collapse was basically all regulators needed to justify stricter rules.

Exactly.

Quote from: bitmover on February 21, 2023, 09:54:08 PM

So the author is already suggesting that all exchanges should be forced to pay for an insurance for user funds. How many exchanges can pay for that? So small exchanges are now doomed, and only big ones such as Binance, Coinbase, FTX, etc will be able to operate if those rules apply everywhere.

I was proposing insurance for exchanges many years ago. Back then most insurers didn't even know how to handle crypto businesses.
The insurance value is meant to be proportional with the size of the exchange / a median amount of funds deposited there. So in theory it should be affordable to the smaller exchanges too. Just most won't want to spend that money.
Insurance is imho okay. But I fear that the result will be stricter regulations for the users, not for the exchanges, and in many cases, while some other crazy regulations may come to life, the insurance may go "forgotten". I'm saying this because the exchanges can just go to softer jurisdictions, while many of the users can't.

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Quote from: NeuroticFish on February 21, 2023, 10:37:19 AM

* The withdrawals are possible because the regulations in Japan ask for mandatory insurance. So the withdrawals come from the insurer, not FTX (which is bad news for the rest of the world).
** I think that this will fuel the urge for more strict regulation of crypto (and not as it should - the crypto businesses), possibly also missing exactly this insurance part.
** I think that this will fuel the urge to make everything with even stricter KYC requirements

I fully agree with all those comments.

FTX collapse was basically all regulators needed to justify stricter rules.

Look at this comment at the end of the news you shared:

Quote

Japan’s ability to protect its consumers from losing money due to the crypto exchange collapse can serve as a model for other countries, The Register noted.

https://technewsspace.com/bankrupt-cryptocurrency-exchange-ftx-has-partially-resumed-operations-in-japan-allowing-customers-to-withdraw-funds/

So the author is already suggesting that all exchanges should be forced to pay for an insurance for user funds. How many exchanges can pay for that? So small exchanges are now doomed, and only big ones such as Binance, Coinbase, FTX, etc will be able to operate if those rules apply everywhere.

The problem is that Bitcoin is about Freedom, but altcoins is mostly about quick-rich schemes.

And when quick-rich schemes go wrong, victims go to authorities asking for their money

pawel7777

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Quote from: NeuroticFish on February 21, 2023, 10:37:19 AM

* The withdrawals are possible because the regulations in Japan ask for mandatory insurance. So the withdrawals come from the insurer, not FTX (which is bad news for the rest of the world).

That makes sense, but, if that's the case, insurance would only cover the fiat equivalent of customers' holding at the date of collapse (or another arbitrary date), so it's not like they can withdraw their crypto and it's not like they aren't in loss, due to BTC appreciating in value since then.

That's kind of a paradox, where insolvent, bankrupt crypto exchanges can end up with a surplus of funds after the bankruptcy process is completed. At the expense of its customers that is. That's something that happened with Mt. Gox.

stompix

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When I read the title of that article I was hoping for a bit more from that "resumed", but this is probably everything they are able now, and of course, they will be swamped with withdrawals since that's all customers can do, it would be simply stupid to keep your funds there and now know if you will ever be able to trade or even be able to get them back one year from now, it's good for the customers of course since they will get their money back but it also means FTX Japan is done for.

Quote from: NeuroticFish on February 21, 2023, 10:37:19 AM

Now, some interesting points:

Quote from: https://technewsspace.com/bankrupt-cryptocurrency-exchange-ftx-has-partially-resumed-operations-in-japan-allowing-customers-to-withdraw-funds/

Japan’s ability to protect its consumers from losing money due to the crypto exchange collapse can serve as a model for other countries, The Register noted.

* The withdrawals are possible because the regulations in Japan ask for mandatory insurance. So the withdrawals come from the insurer, not FTX (which is bad news for the rest of the world).

So, now that we have a few names that have fled Japan over these regulations that are now proven to protect customers, won't this be a good time for users to drop them? I remember a guy that shouts #SAFU all day but when it came to obeying these laws it choose to #RANU Grin

NeuroticFish

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Bankrupt cryptocurrency exchange FTX has partially resumed operations in Japan – allowing customers to withdraw funds
https://technewsspace.com/bankrupt-cryptocurrency-exchange-ftx-has-partially-resumed-operations-in-japan-allowing-customers-to-withdraw-funds/

The title says it all. The Japanese are the luckier. The rest.. can only hope, but not too much.
The withdrawal will not be straightforward, it will happen through Liquid Japan, still, I am sure the Japanese won't complain too much, excepting the few for which somehow the records got lost (strange).

Now, some interesting points:

Quote from: https://technewsspace.com/bankrupt-cryptocurrency-exchange-ftx-has-partially-resumed-operations-in-japan-allowing-customers-to-withdraw-funds/

Japan’s ability to protect its consumers from losing money due to the crypto exchange collapse can serve as a model for other countries, The Register noted.

* The withdrawals are possible because the regulations in Japan ask for mandatory insurance. So the withdrawals come from the insurer, not FTX (which is bad news for the rest of the world).
** I think that this will fuel the urge for more strict regulation of crypto (and not as it should - the crypto businesses), possibly also missing exactly this insurance part.
** I think that this will fuel the urge to make everything with even stricter KYC requirements

* People will miss the point that this is insurance money and will expect FTX "recover". And if FTX name will come back in a way or another, I would not surprised is all will jump in like nothing has happened.

Topic: [2023-02-21] FTX Japan allows customers withdraw their funds (Read 167 times)