ASIC Suspends FTX’s AFS License

The Australian Securities and Investments Commission (ASIC) has suspended the license of FTX Australia Pty Ltd, the local subsidiary of the troubled cryptocurrency exchange, FTX.com, until 15 May 2023. The move came as the entity was placed under voluntary administration on 11 November.

Before ASIC, the financial market regulator in Cyprus suspended the license of the local unit of FTX that allowed the exchange to offer services across the European Economic Area (EEA).

Wednesday’s official announcement detailed that FTX Australia will be permitted to provide limited financial services until 19 December. However, it will be limited to terminating existing derivative contracts with the clients.

FTX Australia was operating in the country with an Australia Financial Services (AFS) license that allowed the company to offer derivatives and foreign exchange contracts to retail and wholesale clients. However, FTX Express did not obtain any license. Now, the two companies have appointed three voluntary administrators, John Mouawad, Scott Langdon and Rahul Goyal of KordaMentha.

Tarnishing Reputation of the Crypto Market

The global exchange FTX.com, its US affiliate FTX.com, Alameda Research, and around 130 other affiliates filed for Chapter 11 bankruptcy protection in the US last week. However, FTX Digital Markets, FTX Australia, FTX Express Pay and LedgerX (operating as FTX US Derivatives) were not named there.

FTX collapsed in a week dragging down the reputation and fortune of its Founder and former CEO, Sam Bankman-Fried. The exchange was reportedly in a shortfall of $8 billion to remain afloat. However, with the allegations of customer fund misappropriation and mounting regulatory scrutiny, no one was willing to inject capital into the exchange.

Now, the exchange brought in a new CEO, John J. Ray III, an expert lawyer in company restructuring.

“ASIC is monitoring this situation closely and speaking regularly with international regulators and the external administrators,” the Aussie regulator stated. “ASIC encourages clients of FTX Australia to carefully monitor the situation and look out for updates by the FTX Group, as well as from FTX Australia’s administrators.”