FTX Australia Loses Financial License After Bankruptcy Filing
In Brief
FTX Australia has had its financial license cancelled by the Australian Securities and Investments Commission, potentially impacting 30,000 retail clients and 132 local companies, with an estimated $8.7 billion in customer assets allegedly misappropriated, but there is hope for recovery if the exchange is successfully relaunched with new financial backing.
The Australian Securities and Investments Commission (ASIC), the financial regulatory body in Australia, has delivered a significant blow to the cryptocurrency landscape by revoking the financial license of FTX Australia. The local branch of the insolvent cryptocurrency exchange has faced this action as a consequence of its bankruptcy filing.
The decision to rescind the license was made on July 14 and publicly announced by ASIC on July 19. FTX Australia, despite the cancellation, will maintain permission to offer limited financial services until July 12 of the following year to settle client affairs. Nevertheless, the firm will be obliged to arrange for client compensation within this timeframe.
FTX Australia previously catered to approximately 30,000 individual clients and offered services to 132 local firms. The license revocation will have significant ramifications for these clients and businesses. In November 2022, ASIC suspended the firm’s AFS license. This license had allowed the firm to create derivatives and foreign exchange contracts for local customers. This suspension occurred in the wake of the bankruptcy declaration by the Bahamas-based FTX on November 11, 2022.
ASIC has cancelled the Australian financial services licence held by FTX Australia https://t.co/Gsmsg9XcYj
— ASIC Media (@asicmedia) July 19, 2023
FTX’s bankruptcy
FTX declared bankruptcy and the company appointed FTX Express and administrators from KordaMentha. KordaMentha is an investment firm based in Sydney. The head of restructuring at FTX‘s global entity submitted a report to a US bankruptcy court. This happened last month. The report revealed that they secured around $7 billion in liquid assets. However, they also disclosed an alleged misappropriation of customer assets amounting to approximately $8.7 billion.
Despite the license cancellation, FTX may rise from the ashes as a completely new exchange. The restructuring team is currently engaging in discussions with potential investors who show interest in financially supporting such a revival. This development brings a ray of hope to FTX’s clients, who might be able to recoup some of their lost assets if the exchange successfully re-establishes itself with new financial support.
- Cryptocurrency prices dropped after Binance Global Inc. withdrew their offer to buy FTX.com, leaving the crypto exchange at risk of collapse.
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About The Author
Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
