The Australian Securities and Investment Commission (ASIC) has come down hard on the Australian arm of FTX. This morning, ASIC suspended FTX Australia’s financial services licence until May 15 next year — which, by the looks of things, FTX probably won’t be around to see.
Along with the suspension, ASIC also removed its permit to deal in derivatives trading, foreign exchange contracts as well as providing general financial advice. ASIC clarified that FTX Australia can provide limited services until December 19.
“Until 19 December 2022, FTX Australia can continue to provide limited financial services that relate to the termination of existing derivatives with clients,” reads the official statement from ASIC.
“KordaMentha’s John Mouawad, Scott Langdon and Rahul Goyal have been appointed as the voluntary administrators of FTX Australia and its subsidiary FTX Express Pty Ltd, which operates a digital currency exchange that is not regulated by ASIC.”
30,000 Australians caught in the crossfire
According to a recent report from the Australian Financial Review, administrators will attempt to recover the funds of roughly 30,000 Australian investors and 132 companies that were embroiled in the financial chaos that followed the sudden collapse of FTX.
The report adds that while Bankman-Fried and key members of the FTX team remain under police supervision in the Bahamas, Australian FTX employees have been co-operating with the administrators.
FTX Australia was established March this year. With just five employees, the establishment of FTX Australia can be viewed as a regulatory front that allowed FTX to offer financial products and services to Australian consumers, with custody of assets being handled by its much larger international arm based in the Bahamas.
ASIC’s announcement comes just days after FTX and its roughly 150 associated entities filed for Chapter 11 bankruptcy protection in the United States.
FTX was once the world’s fourth largest cryptocurrency exchange with an estimated value of US$32 billion. It was revealed that the exchange had been artificially inflating its value as well as using customer funds to finance its own trading activities.
Now, the value of the FTX exchange has been written down to zero by many major financial institutions. It’s estimated that FTX owes somewhere between US$8 billion and US$10 billion to investors who remain unable to access funds stuck on the platform.