By
Bhushan Akolkar
April 26th, 2024
Based on its license, FTX Australia was authorized to deal in, make a market for, and provide general advice on derivatives and foreign exchange contracts.
FTX Australia, the local subsidiary of the bankrupt crypto exchange FTX, has lost its license to operate in the Asian-Pacific country. The Australian Securities and Investment Commission (ASIC) announced the cancellation of the license on July 19.
Previously, it had suspended the license in November after FTX Global declared bankruptcy. As of when the license was suspended, FTX Australia had about 30,000 retail clients. It also serviced 132 Australian companies. Consequently, many were surprised to discover that FTX Australia had been operating with a non-specific Australian Financial Services License.
FTX Australia’s Controversial License
FTX Australia did not receive its license directly from the ASIC. Instead, it got the license through a series of takeovers. The original firm had obtained the license in 2008. Consequently, the license was not specific to its services in Australia.
Based on its license, FTX Australia was authorized to deal in, make a market for, and provide general advice on derivatives and foreign exchange contracts. This could be offered to retail and wholesale clients. However, the license did not specify crypto-assets or operating a crypto-asset exchange.
It didn’t take time for the ASIC to suspend the entity’s license after its mother body declared bankruptcy in the Bahamas in November. The license suspension was due to end by May 25, 2023, before an extension to 24 July. Thereafter, the ASIC completely withdrew the license on July 19 with the cancellation taking effect from July 14.
FTX Australia will continue to provide limited financial services relating to the termination of its derivatives service on July 12 next year. According to the regulator, the company would still need to compensate its clients.
FTX May Re-launch as a New Entity
Meanwhile, the global FTX entity has reported a recovery of about $7 billion in liquid assets. However, about $8.7 billion worth of customer assets were allegedly misappropriated, leaving a shortfall of about $2 billion. According to CEO John Ray, the search for additional assets continues.
Despite this, FTX could re-launch as an entirely new exchange. Again, John Ray noted the company had “begun the process of soliciting interested parties to the reboot of the FTX.com exchange. Also, FTX’s legal team opined a new exchange could be launched by the second quarter of 2024
It appears as though Ray and the rest of the debt-restructuring team see a reboot as the best way to ensure creditors are repaid maximally.