On July 19, Australia’s financial services regulator declared that it had canceled the license of the Australian branch of the collapsed US crypto exchange, FTX. The license was revoked on July 14th. The decision follows events that have threatened the stability of Australia’s crypto industry.
Bahamas-based FTX had become a prominent company in the crypto market. It was valued at an impressive $32 billion in January 2023. Meanwhile, the exchange’s fortunes experienced a significant downturn last November.
The platform filed for bankruptcy protection in the US. The move came after the exchange failed to refund those who had deposited funds. However, this generated a crisis that affected the whole industry.
Moreover, FTX’s collapse led regulators worldwide to investigate the cryptocurrency industry closely. The increased supervision and the consequences of FTX’s bankruptcy made the environment uncertain and chaotic for digital asset exchanges.
During the chaos in the crypto industry, Sam Bankman-Fried, FTX’s founder, finds himself caught up in a criminal lawsuit filed by the US government. The lawsuit accused him of fraud. However, Bankman-Fried strongly denied the accusations and has pleaded not guilty to the charges.
Last month, the restructuring chief for FTX’s global entity reported to a US bankruptcy court. He said the platform had recovered approximately $7 billion in liquid assets. However, they estimated that $8.7B worth of users’ assets were allegedly misappropriated.
ASIC’s Actions Against FTX
Last November, the Australian Securities and Investments Commission took regulatory measures in response to the exchange’s challenges. Authority suspended the FTX’s license until May. However, the suspension effectively revoked FTX’s authorization to engage in derivative and foreign exchange contracts with wholesale and retail customers in the country.
Moreover, the situation worsened with the recent announcement of complete license cancellation. This has a significant impact on FTX performance in the country. However, despite the complete license cancellation, the regulator allowed the exchange a limited time to offer certain financial services. This window will remain open until July 12, 2024.
Moreover, FTX Australia would still need to make arrangements to compensate its customers until that time, as per the regulator’s statement. The company had approximately 30,000 retail clients and served 132 local firms.