Key Takeaways
- FTX Australia will still be allowed to provide limited financial services while it wraps up its dealings with clients until July 12 next year.
- Last November, ASIC suspended FTX Australia’s license.
In a significant regulatory move, the Australian Securities and Investments Commission (ASIC) has announced the cancellation of FTX Australia’s financial license, the local subsidiary of the bankrupt cryptocurrency exchange. The decision, which took effect on July 14, comes after a series of events that have raised concerns about the stability of the crypto market in Australia.
Last November, ASIC suspended FTX Australia’s license until May, withdrawing its permission to deal in derivatives and foreign exchange contracts for retail and wholesale clients. This suspension was triggered shortly after FTX’s parent company filed for bankruptcy on November 11, 2022, casting doubt on the subsidiary’s ability to operate in the market.
With this late move, ASIC has canceled the FTX Australia license in its entirety. This move directly impacts the 30,000 retail clients and 132 local companies that relied on the platform’s services.
However, ASIC has granted FTX Australia a limited window of operation, allowing the company to provide restricted financial services until July 12 next year. During this transitional period, the exchange will be required to complete its dealings with clients and make necessary arrangements for compensating them. ASIC’s decision aims to provide some relief and protection for the affected clients during this challenging phase.
It is essential to note that despite the license revocation, FTX Australia is obligated to fulfill its commitments as a member of the Australian Financial Complaints Authority and must continue to have arrangements in place to compensate retail clients. These provisions will remain in force until the specified deadline of July 12, 2024.
FTX’s bankruptcy proceedings have been closely monitored, and as of June 26, the company has recovered approximately $7 billion in liquid assets. The search for additional assets is ongoing as FTX strives to secure further compensation for those impacted by the bankruptcy. CEO John Ray has been leading these efforts to ensure that stakeholders are duly compensated.
