FTX Contagion’s Next Victim: A Japanese Exchange

FTX loaned the exchange $120 million after its warm wallets were compromised last year

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FTX-owned Japanese exchange Liquid Global will halt all withdrawals including both fiat and cryptocurrencies.

Withdrawals were suspended so that the company could be in compliance with requirements of voluntary Chapter 11 proceedings in the United States, according to a tweet by the company. 

“This is not a security related halt,” the exchange tweeted. 

Adding, “Until further notice we would suggest to not deposit either FIAT or Crypto.”

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Liquid Global had been the victim of a $97 million hack in August 2021, where the exchange revealed that its “warm” wallets had been compromised. 

Soon after the hack, Liquid Global announced in a blog post that it had received a $120 million loan from FTX.

At the time, the exchange said it was “grateful for the vote of confidence from FTX and the valuable support of its users.”

“The financing will also improve Liquid’s balance sheet and, in turn, its key regulatory metrics, which further corroborates its ongoing licensing opportunities in the key jurisdictions of Japan and Singapore,” Liquid Global added.

FTX subsequently acquired the company and Liquid Global’s parent company, Quoine, in February 2022.
Quoine was one of the first exchanges to be granted a digital asset operating license under Japan’s Payment Services Act in 2017. It is in the process of acquiring similar approval from the Monetary Authority of Singapore, and FTX’s bankruptcy filing last week will likely affect its application.


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