Key takeaways:
- ASIC was concerned about the operations of FTX Australia after it was granted a licence.
- FTX received a Section 912C notice from the regulator during its first month of operation.
The Australian financial authorities reportedly expressed concerns about FTX’s local Australian associate as early as August, eight months before the exchange’s devastating downfall in November.
The Australian Securities and Investments Commission (ASIC), which obtained an Australian Financial Services (AFS) licence by acquiring a regional financial institution, IFS Markets, in December 2021, was worried about the operations of FTX Australia, as per records gathered by Guardian Australia.
The Australian Securities and Investments Commission (ASIC) sent FTX three letters and put the exchange under “monitoring action” months before its bankruptcy,
According to the recently acquired records, the regulator issued a Section 912C notice
to FTX the same month it started operating, requesting information about its operations so that ASIC could determine if it complied with AFSL licensing requirements.
The now-defunct exchange received an s912C notice requesting that FTX provide information so that ASIC could determine if it conformed with the licencing terms and whether it was qualified to hold the AFS licence.
By acquiring a current AFS license holder, FTX Australia was able to avoid the regulator’s close monitoring. Following the demise of Sam Bankman-bigger Fried’s FTX empire, ASIC suspended FTX Australia’s AFS licence.
Additionally, FTX placed its Australian subsidiaries under voluntary administration and is already in debt to its about 3,000 clients for almost $1 million.
The regulators were worried about the exchange’s price, user enrollment, and adherence with ASIC’s product intervention order, an ASIC spokeswoman further disclosed.
FTX Australia was one of more than 130 FTX-related companies that ceased operations after its parent company, FTX, declared bankruptcy on November 11.
On November 16, FTX’s Australian subsidiary had its financial license suspended and entered voluntary administration, which is similar to Chapter 11 bankruptcy in the United States.
ASIC is currently evaluating FTX for “suspected violations of the corporation’s legislation,” according to the report.
