FameEX Hot Topics | FTX Australia's License Revoked by Securities Commission

Australia's securities regulator, the Australian Securities and Investments Commission (ASIC), has taken a significant step in the aftermath of the collapse of the crypto exchange FTX by canceling the financial services license of its local entity, FTX Australia. The regulatory body made the announcement through a press release on its website, stating that the cancellation took effect on July 14, 2023.

FTX, a major digital asset exchange headquartered in the Bahamas, encountered severe financial troubles that led it to seek Chapter 11 bankruptcy protection in the United States back on November 11, 2022. Subsequently, its founder, Sam Bankman-Fried, was extradited to the U.S. to face a lawsuit for alleged fraud.

Following the bankruptcy filing, Australian authorities appointed three voluntary administrators for FTX Australia and its subsidiary, FTX Express Pty Ltd. The latter entity operates a digital currency exchange not regulated by ASIC. In the wake of these events, ASIC had previously suspended FTX Australia's AFS license on November 14, 2022. Initially, the suspension was set to be in effect until May 15, 2023, but it was later extended until July 24, 2023.

With the recent cancellation of FTX Australia's financial services license, the company is now restricted to providing only limited financial services. Specifically, these services will be focused on the termination of existing derivatives with clients and arrangements to compensate retail customers. The limitations are slated to remain in place until July 12, 2024.

Despite the license cancellation, ASIC clarified that it does not impact FTX Australia's requirements to maintain its membership with the Australian Financial Complaints Authority. Moreover, the company is still obligated to have appropriate arrangements in place to compensate retail clients.

This move by ASIC comes as part of its efforts to ensure investor protection and maintain the integrity of the financial services industry in Australia. The cancellation of FTX Australia's license serves as a significant regulatory action in response to the collapse of FTX, highlighting the authorities' commitment to addressing issues arising from the cryptocurrency space.

As the situation unfolds, market participants and investors will closely monitor further developments surrounding FTX Australia and its subsidiary. The cancellation of the financial services license could have broader implications for the crypto industry in Australia, potentially influencing regulations and compliance measures for digital asset exchanges in the country. It also underscores the growing scrutiny of cryptocurrency-related businesses by regulators worldwide. For now, the focus remains on the ongoing proceedings, and how FTX Australia will navigate its operations within the limited scope of financial services allowed under the license cancellation.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.