Australian regulator cancels license of FTX’s local entity
The Australian financial services regulator has cancelled the license of FTX Australia, the local unit of the bankrupt crypto exchange.
- The regulator will allow FTX Australia to provide limited financial services until 12 July 2024.
- The Australian unit of FTX had around 30,000 retail customers when it collapsed in November last year.
The Australian financial services regulator has cancelled the license of FTX Australia, the local unit of the bankrupt crypto exchange.
The Australian Securities and Investments Commission (ASIC) issued a press release on 19 July, announcing the cancellation of FTX’s Australian Financial Services (AFS) license.
ASIC has cancelled the Australian financial services licence held by FTX Australia https://t.co/Gsmsg9XcYj
— ASIC Media (@asicmedia) July 19, 2023
The regulator said it will allow FTX Australia to provide limited financial services while wrapping up its client interactions until 12 July 2024. The regulator also asks the entity to work towards compensating its clients until that time. The Australian unit of FTX had around 30,000 retail customers, and serviced 132 local companies.
The latest statement from the ASIC read,
The cancellation has no effect on requirements for FTX Australia to continue as a member of the Australian Financial Complaints Authority, and to have arrangements for compensating retail clients.
How Australia handled the crisis at FTX
The ASIC suspended FTX Australia’s license in November 2022. The directive barred FTX Australia from trading in derivative and foreign exchange contracts to retail and wholesale customers. The action followed the Bahamas-headquartered firm filing for bankruptcy in the U.S. a few days earlier.
However, the regulator later reinstated the license so that authorities could assist in unwinding trading positions and determining which funds belonged to whom.
There are two FTX entities in Australia, FTX Australia and FTX Express. The former held the AFS license that allowed it to offer derivative products to local customers. The latter allowed local customers to purchase crypto assets with Australian currency.
Australian customers who linked a personal wallet or transferred crypto assets from another exchange to FTX are likely to be creditors in the global claims against FTX Trading.
As per a Wall Street Journal report from June, FTX could re-launch as an entirely new exchange, with its restructuring team holding talks with parties potentially interested in financially backing such a reboot. Sources said that current FTX creditors would potentially be offered a stake in the reorganized crypto exchange, among other forms of compensation.
