Australia’s ASIC aired concerns about FTX ‘eight months’ before its collapse

• Australia’s financial regulator raised concerns about FTX’s local subsidiary up to eight months before the exchange’s collapse
• Approx. 30,000 Australian customers and 132 businesses are owed money or cryptocurrencies by the exchange

According to a recent Guardian Australia report, Australia’s financial regulator had raised concerns about FTX’s local Australian subsidiary up to eight months before the exchange’s untimely collapse in November last year.

According to documents obtained by the newspaper, ASIC officers were concerned about the way FTX Australia was operating because it was able to obtain a license in the country through a company takeover.

FTX obtained its Australian Financial Services License (AFSL) by acquiring IFS Markets in December 2021, before going live in March 2022.

This has effectively allowed FTX Australia to avoid the same level of scrutiny that is usually applied to new AFSL licensees.

The report added that the regulator reportedly issued a Sect 912C notice to FTX the same month it began operations, requiring the crypto-exchange to provide documents about its operations so that ASIC could determine whether it met AFSL license conditions.

ASIC can direct the licensee to provide documents describing the financial services they provide, the financial services business the licensee operates, and whether the licensee meets the fit and proper person test.

Regulator had FTX Australia under surveillance

A briefing document obtained by the outlet also confirmed that in the months between the initial concerns and FTX’s collapse on 11 November, the regulator placed the exchange under surveillance and issued three notices to the exchange. According to the document schedule, the regulator was still concerned about FTX’s operations as late as October 2022.

FTX Australia was one of more than 130 FTX-related companies that ceased operations after its parent company, FTX, declared bankruptcy on 11 November 2022. On 16 November 2022, the Australian subsidiary of FTX had its financial license suspended and went into voluntary administration.

It is estimated that approximately 30,000 Australian customers and 132 businesses are owed money or cryptocurrencies by the exchange.