The Cyprus Securities and Exchange Commission responded today (3 April) to the announcement by FTX EU (Cyprus) that it will commence processes for the return of segregated funds to investors pursuant to Cyprus Law.

Chair of the Cyprus Securities and Exchange Commission, Dr George Theocharides said: "We are pleased that our work as the Regulator has contributed to this positive development after months of uncertainty and concern for investors.

"We are grateful to the FTX Group Administrators for their collaboration and support towards these efforts. Safeguarding the interests of investors is of paramount importance and CySEC will continue to hold FTX EU Ltd to account to ensure all withdrawal requests are processed swiftly and appropriately."

FTX EU LTD (formerly K-DNA Financial Services LTD) stated on 31 March that it has initiated processes to allow customers of FTX EU LTD to request final balances in advance of withdrawal of fiat currency funds remaining in segregated client accounts of FTX EU LTD.

The statement continued: "FTX EU LTD will provide to customers a statement of the balance of fiat currency funds to which they are entitled in accordance with MiFID II as transposed to L. 87(Ι)/2017.  Following completion of this process and subject to sufficiency of funds, each customer of FTX EU LTD will be entitled to withdraw such customer's balance (in fiat currency) as segregated in designated customer accounts in compliance with L. 87(Ι)/2017 and the terms of its Cyprus license 273/15 (currently suspended) held by FTX EU LTD.

"The balances will be communicated and verified, and subsequently withdrawal requests may be submitted through the following website established for this purpose:  Any withdrawal requests will be subject to customary know-your-customer and anti-money-laundering checks, and a customer's withdrawal may be delayed if bank or other account details have not been sufficiently verified.  Each customer of FTX EU LTD is also being informed via e-mail to such customer's e-mail address as reflected in customer records.

"Withdrawals will be available only to customers of FTX EU LTD who opened their accounts through, after March 7, 2022).  This announcement does not relate to any customers of any other FTX group businesses, even if such customers are located in Europe."

The statement further said that on 30 March, 2023, "customers of FTX EU LTD received an email communication from Kroll notifying them of scheduled claim information relating to the Chapter 11 case of FTX Trading LTD and its affiliated debtors, (collectively, the "Debtors"), which is currently pending before the United States Bankruptcy Court for the District of Delaware and jointly administered under the case number 22-11068 (the "Bankruptcy Cases").

"As clearly stated in the Kroll email, the scheduled claim information included in that email is not a statement by the Debtors of the amount or validity of any claim held by any person. The scheduled claim information does not reflect the actual net balance of FTX EU LTD customer accounts.

"Rather, it is an amount derived from the historical internal records of the Debtors and was required to be sent under applicable law in connection with the Bankruptcy Cases. Among other things, the scheduled claim information does not reflect the fact that all FTX EU LTD customer positions were closed and settled in fit currency as of 12 November 2022, in accordance with the Terms of Service and Execution Policy of FTX EU LTD, due to the shutdown of the FTX platform on such date.

"Prior to the shutdown of the international platform, FTX EU LTD operated as a MiFID II-regulated Investment Firm offering trading in multi asset derivatives, in particular with crypto assets as underlying.  The Cyprus Securities and Exchange Commission has suspended its license and ordered FTX EU LTD to return funds to its customers who request withdrawals."