The Australian Securities & Investments Commission (ASIC) announced on Wednesday that it has officially revoked the license of FTX’s Australian subsidiary. The move comes after the U.S.-based cryptocurrency exchange, FTX, faced a tumultuous downfall, culminating in its filing for bankruptcy protection in the United States in November of last year. The cancellation of FTX Australia’s license will be effective from July 14.
Once Thriving Crypto Star Faces Regulatory Turmoil
FTX, which had been a prominent player in the crypto industry, boasted an impressive $32 billion valuation in January’23. However, the exchange’s fortunes took a sharp turn as it grappled with challenges that eventually led to its collapse.
Further, the company cited its inability to fully reimburse customers who had entrusted funds to the platform as the primary reason for its bankruptcy filing.
Legal Woes and Global Scrutiny
Regulatory authorities worldwide have characterized the aftermath of FTX’s demise by increased scrutiny.
Founder of FTX, Sam Bankman-Fried, is currently embroiled in a criminal lawsuit brought against him by the U.S. government, which accuses him of engaging in fraudulent activities. Bankman-Fried has vehemently denied these allegations and pleaded not guilty in response to the charges.
ASIC’s Previous Suspension and Limited Services Extension
The ASIC had already taken action last November by suspending FTX License in Australia until May of this year. This suspension involved the withdrawal of FTX’s permission to conduct operations related to derivatives and foreign exchange contracts for both retail and wholesale clients.
However, the regulator has now decided to go a step further by completely canceling the license, effectively ending FTX’s operations in Australia.
In light of the recent development, FTX License Australia has been granted a grace period until July 12, 2024. It is to provide limited financial services exclusively for the purpose of terminating existing derivatives with clients.
Business as Usual for Certain Aspects
Despite the license cancellation, certain aspects of FTX Australia’s operations remain unaffected. The company is still required to maintain its membership in the Australian Financial Complaints Authority and uphold arrangements to compensate retail clients.
FTX License Cancellation and Response
FTX has not yet responded to the ASIC’s announcement regarding the license cancellation, and its future plans in the wake of this decision remain unclear.
The cryptocurrency industry at large continues to face heightened scrutiny as global regulators aim to establish a framework for the rapidly evolving market. The fate of FTX and its founder’s legal battle serve as cautionary tales for other players in the space, underscoring the importance of compliance and transparency in this burgeoning sector.
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