FTX Japan and the Liquid group: purchase, regulators' orders and sale to bitFlyer

analysisLiquid Group, Inc. was a holding company owning two crypto exchange operators, Quoine Corporation in Japan and Quoine Pte. Ltd. in Singapore. According to Seth Melamed, a Liquid shareholder and executive, Liquid borrowed $120 million from FTX Trading Ltd under a loan agreement of 30 August 2021, after a breach of some of Quoine's hot wallets that was attributed to North Korean state actors, and a non-binding term sheet for FTX's purchase of Liquid followed on 2 September 2021. Melamed signed his share purchase agreement on 19 November 2021; he says that at completion on 4 April 2022 his shares and options were transferred to FTX, which agreed to pay him $44,516,390.24, including 1,019,070 FTX shares, and that Liquid became FTX Japan Holdings, Quoine became FTX Japan and Quoine Singapore became FTX Singapore. The Singapore International Commercial Court found that FTX Japan Holdings K.K. was a wholly owned subsidiary of FTX Trading Ltd and sole shareholder of Quoine Pte Ltd. ULS Group, a Tokyo-listed company, said in November 2022 that its business and capital alliance with QUOINE K.K. dated from 2016 and that it had dissolved the capital relationship on 19 April 2022. ^{1 2 3}

analysisJapan's corporate register lists FTX Japan Holdings K.K. under corporate number 5010001199009 in Chiyoda-ku, Tokyo; a start-up database, undated, gives its establishment as 1 March 2019, its February 2022 announcement of the FTX transaction, and Kariya Kayamori as representative director with Melamed as chief operating officer, without saying when they held those posts. ^{4 5}

analysisOn 10 November 2022 the Financial Services Agency announced that the Kanto Local Finance Bureau had ordered FTX Japan K.K., a registered crypto-asset exchange and Type I financial instruments business, to suspend business and improve its operations under the Payment Services Act, and had issued a domestic asset-holding order, a business suspension order and a business improvement order under the Financial Instruments and Exchange Act. A further domestic asset-holding order followed on 8 March 2024. No statement by FTX Japan answering the orders was retained, and the retained records do not show when the 2022 and 2024 orders were lifted. ^{1 2 3 4}

analysisJapanese customers were treated differently from FTX.com's: their terms stated that fiat deposits were held in a segregated trust, and the debtors acknowledge that the group segregated customer funds in Japan as local rules required. In his filing Melamed presents Quoine as a valuable licensed business, granted a Type 1 licence in October 2021 that required asset segregation and daily reconciliation, with 2021 monthly revenue across Japan and Singapore averaging $2.4 million; he states that FTX Japan resumed withdrawals on 21 February 2023, about 102 days after the petition, crediting the FTX Japan team's work and the fact that it had never commingled customer assets, and that by July 2024 some 13,000 customers had withdrawn about $200 million. The resumption date and these figures are his account and are not confirmed by any debtors' or regulator's record among the retained records. ^{5 6 7}

analysisOn 19 June 2024 FTX Japan Holdings and bitFlyer Holdings, Inc. signed a share transfer agreement for all of FTX Japan K.K.; the Bankruptcy Court approved the sale on 16 July 2024 and dismissed FTX Japan's Chapter 11 case effective on closing, and the transfer was completed on 26 July 2024. bitFlyer announced that day that Melamed, Kurt Knipp and Atsushi Taira were leaving their posts and that Koya Takahashi, at the company since 2020 and a director of both FTX Japan companies from September 2022, would be representative director; on 28 August 2024 bitFlyer announced that FTX Japan had been renamed Custodiem, Inc., keeping its crypto-asset exchange and Type I financial instruments registrations. ^{1 2 3 4 5}

analysisQuoine Pte Ltd, incorporated in Singapore in 2014, filed its own Chapter 11 case on 11 November 2022. Its board appointed Kurt Knipp and Philippe Taverne as foreign representatives in November 2024, and on 12 February 2025 the Singapore International Commercial Court recognised the case as a foreign main proceeding, finding that post-petition events had moved Quoine's centre of main interests to the United States; it granted relief tied to the debtors' plan but declined to recognise nine of the U.S. orders listed. The court recorded that Quoine no longer did business in Singapore, that the Liquid.com exchange had ceased trading, that its cash had moved to U.S. accounts under new U.S. management and that its digital assets were in the custody of BitGo Trust Company in the United States. Indian company records list Knipp as a director of Quoine India Private Limited, one of the original Chapter 11 debtors (its case was dismissed in April 2024), from 30 September 2024 and Kayamori among its past directors. ^{1 2 3 4}

analysisMelamed says he became representative director and chief operating officer under a management agreement signed at completion, joined FTX Singapore's board in August 2022, stayed on at FTX Japan after the petition until the sale, and was terminated without cause as representative director of FTX Japan Holdings on 30 July 2024. He filed six claims: $35.6 million against FTX Trading for the sale of his Liquid shares, plus service fees of $52,500 and a $200,000 bonus against the Japanese and Singapore companies. He alleges that FTX misled him in the Liquid transaction with false audited financial statements, false statements that customer assets were segregated, concealment of Alameda's privileges, a false FTX Trading balance sheet and fraud in the Series B-1 round. The debtors objected on 10 July 2024, asking the court to disallow his main claim or reduce it and subordinate it as an equity claim, and to disallow the fee and bonus claims. No ruling is in the retained records: he appealed to the District Court, where mediation was found inappropriate in November 2024, and in October 2026 he was still litigating a reconsideration motion, while the docket also lists his suit against the FTX Recovery Trust. ^{1 2 3}

analysisFTX Trading's statement of financial affairs lists a $6,000,000 cash payment to Kayamori on 4 April 2022, describing his relationship to the debtor as director or officer. Kayamori filed claims against FTX and FTX Japan in June 2023; after the debtors objected in July 2024 he responded and asked to file his response under seal, describing the material as including the Liquid share purchase agreement, his separation agreement with the debtors and the debtors' financial statements. The retained records do not show how his claims were resolved. ^{4 5}