ASIC Cancels License of Bankrupt FTX Australia

ASIC Cancels License of Bankrupt FTX Australia

The Australian Securities and Exchange Commission (ASIC) today (Wednesday) announced the cancellation of the Australian financial services (AFS) license held by FTX Australia Pty Ltd (FTX Australia), effective from 14 July.

FTX Australia Has Lost Its License

FTX Australia and its subsidiary FTX Express Pty Ltd filed for bankruptcy on 11 November 2022 with the appointment of voluntary administrators. ASIC’s decision to suspend the license of the exchange came immediately after that, on 14 November. Initially, the suspension was dated until 15 May 2023, later extended until 24 July.

Under the cancellation terms, though bankrupt, the exchange can still provide limited financial services until 12 July 2024 relating to the termination of existing derivatives with clients. The official announcement further highlighted that the license cancellation has “no effect on requirements for FTX Australia to continue as a member of Australian Financial Complaints Authority, and to have arrangements for compensating retail clients.”

The Fall of FTX

FTX, once a renowned crypto exchange with a global presence, collapsed last November as the shady business practices of its founder and former CEO, Sam Bankman-Fried, surfaced. The exchange could not handle the sudden withdrawal pressure and immediately collapsed. Bankman-Fried is now facing criminal ad civil charges in the US, while his other top associates pled guilty to both criminal and civil charges against them.

Apart from Australia, other regulators suspended the operational license of bankrupt FTX. Cyprus, which suspended the license of the exchange on 11 November 2022, extended it until the end of September 2023.

While the exchange has ongoing complex bankruptcy proceedings in process, its subsidiaries have also started to return customer funds. FTX Japan was the first to resume withdrawals earlier this year that witnessed an overwhelming demand. The Europen subsidiary of FTX also launched a dedicated withdrawal portal, however, it did not disclose any statistics. Meanwhile, the administrators of the Aussie subsidiary are yet to confirm anything about returning customers’ funds.

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This article was written by Arnab Shome at www.financemagnates.com.

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