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Here’s Why Regulator Terminates FTX Australia License

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VOC, Voice of Crypto, Australia, FTX

Key Insights

  • ASIC suspends FTX’s local subsidiary in Australia
  • The Security regulator said it had placed FTX Australia into voluntary administration until 19 December 
  • ASIC says the license may be returned by May 2023. 

 

Australian regulator becomes the latest to suspend FTX’s local subsidiary license. Since the FTX debacle began, several individuals and authorities have been assessing the level of damage. Similarly, the authorities have been releasing several regulatory guidelines to mitigate the effect of the crash.

These guidelines range from crypto exchanges suspending withdrawals to others denouncing their relationship with FTX. The latest such regulation comes from the Australian Securities Regulator.  

Australian Regulator Suspends FTX Australia’s License

The Australian Securities & Investments Commission (ASIC) said it had suspended the license of FTX Australia. The Australian Securities Regulator said the license suspension takes effect immediately until May 2023. 

Furthermore, the implication is that the regulator has taken back its permit issued to FTX Australia. The exchange can no longer deal with retail and wholesale clients in derivative and foreign exchange contracts. In addition, they can not provide general advice.

The Australian Securities & Investments Commission (ASIC) said, “we are monitoring this situation closely and speaking regularly with international regulators— and external administrators.” 

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In what seems to be a lenient approach, ASIC allows FTX to conduct some services. They said FTX Australia can continue to provide limited financial services for terminating existing derivatives with clients until 19 December. 

As part of the announcement, ASIC said it is monitoring the situation closely. They, therefore, encourage clients of FTX Australia to monitor closely and look out for updates from the FTX Group. 

Even though FTX Australia has not responded to the license suspension— experts say they can apply to the Administrative Appeals Tribunal. The Appeal will review the decision of the Australian Securities & Investments Commission (ASIC).  

Similarly, ASIC has also placed FTX Australia into voluntary administration. After that, it appointed  John Mouawad, Scott Langdon, and Rahul Goyal of KordaMentha as voluntary administrators of FTX Australia and FTX Express Pty Ltd.

The FTX Express is a subsidiary of the FTX group that operates a digital currency exchange and is not regulated by ASIC. 

There are expectations that before the license is validated in May next year, FTX will overcome the challenges. 

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