The Australian financial services regulator, the Australian Securities and Investments Commission (ASIC), has taken significant action by canceling the license of FTX Australia, the local unit of the embattled crypto exchange.
This move comes amidst the bankruptcy woes of the crypto platform, creating uncertainty in the Australian crypto market.
On 19th July, ASIC issued a press release announcing the cancellation of FTX Australia’s Australian Financial Services (AFS) license.
However, the regulator has allowed FTX Australia to continue providing limited financial services until 12th July 2024, specifically to wrap up its client interactions.
The entity is also required to work towards compensating its clients during this period. FTX Australia had been catering to around 30,000 retail customers and servicing 132 local companies.
According to the latest statement from ASIC, the license cancellation does not affect FTX Australia’s obligation to remain a member of the Australian Financial Complaints Authority and maintain arrangements for compensating retail clients.
The regulatory troubles for FTX Australia started in November 2022 when ASIC suspended its license. The directive prohibited FTX Australia from trading in derivative and foreign exchange contracts with both retail and wholesale customers.
This suspension followed the filing for bankruptcy by the Bahamas-headquartered parent firm, FTX Trading, in the U.S.
Despite the suspension, ASIC later reinstated FTX Australia’s license to assist in unwinding trading positions and determining the rightful ownership of funds.
This decision aimed to provide support during the challenging situation faced by the crypto exchange.
Australia housed two FTX entities: FTX Australia and FTX Express. The former was granted an AFS license, enabling it to offer derivative products to local customers.
On the other hand, FTX Express allowed local customers to buy crypto assets using Australian currency.
Australian customers who linked their personal wallets or transferred crypto assets from other exchanges to FTX are likely to be considered creditors in the global claims against FTX Trading.
According to a Wall Street Journal report from June, there are talks of FTX potentially re-launching as an entirely new exchange.
The restructuring team is exploring financial backing options for this reboot. Current FTX creditors might be offered a stake in the reorganized crypto exchange as part of potential compensation.
