bitFlyer acquires FTX Japan to expand crypto custody services

BitFlyer, the Japanese crypto exchange, announced that it has completed its acquisition of FTX Japan, making it a wholly owned subsidiary.

The deal, finalized on July 26, will see bitFlyer assume 100% ownership of FTX Japan’s outstanding shares.

Crypto Custody Services

In a press release on Friday, bitFlyer detailed its plans to rebrand the newly acquired entity as a “Custody New Company” by August 26, 2024. This new entity will focus on expanding the bitFlyer’s crypto custody business, leveraging the company’s existing operational resources and advanced wallet technology. .

“By acquiring all the shares and management rights of FTX Japan, we aim to achieve sustainable growth,” bitFlyer said. “We will leverage the synergies within the bitFlyer Group to develop new services, benefiting not only FTX Japan and its customers, but all bitFlyer Group stakeholders.”

According to bitFlyer, the Custody New Company will focus on meeting the growing demand for secure crypto asset management among institutional investors.

“The growing need for institutional investors to enter the crypto asset market and the need for professional security measures drive our strategy,” bitFlyer explained. “We believe that providing advanced crypto custody services and crypto asset ETF-related services will add significant value to the bitFlyer group.”

bitFlyer also said it is ready to meet this demand with advanced security measures, using its expertise in blockchain technology and security. The company has developed a highly secure wallet, which will be part of its new crypto custody offerings.

Financial terms of the acquisition have not been disclosed. However, they stated that it is exploring providing services related to cryptocurrency derivative ETFs pending further legislative developments in Japan, including tax regulations. These offers are intended to meet the needs of financial institutions and trusted banks.

History of FTX Japan

The acquisition follows a sale order issued by the US Bankruptcy Court on July 16, 2024. FTX Japan has been under Chapter 11 bankruptcy protection since November 2022, following the collapse of its parent company, FTX. The Japanese arm had halted exchange operations after the bankruptcy filing, but continued to manage client assets.

FTX Japan was launched in June 2022, thanks to the acquisition of fintech company Liquid Group and its subsidiaries, including Quoine Corporation, one of Japan’s first crypto exchanges.

Despite its promising start, FTX Japan ran into trouble just five months later when its parent company collapsed amid allegations of embezzlement and misappropriation of billions of dollars in client funds. FTX founder Sam Bankman-Fried was later sentenced to 25 years in prison and ordered to repay $11 billion.

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