The local affiliate of the defunct cryptocurrency exchange, FTX Australia, has had its banking license canceled by the Australian financial regulator.
The revocation was notified on July 19 by the Australian Securities and Investments Commission (ASIC). It becomes effective on July 14.Until July 12, 2023, the exchange will be permitted to provide a limited range of financial services before ceasing all client interactions.
As required by the regulatory body, FTX Australia must also create plans for compensating its clients during this time. Before the cancellation, FTX Australia provided services to 132 regional businesses and served about 30,000 retail customers.
When ASIC suspended FTX Australia’s Australian Financial Services (AFS) license, which allowed the development of derivatives and foreign currency contracts for domestic clients, the company’s problems started.
The suspension occurred soon after Bahamas-based FTX’s bankruptcy filing on November 11, 2022. After FTX filed for bankruptcy, administrators from Sydney-based investment and advisory company KordaMentha were hired to help restructure FTX Australia and its subsidiary, FTX Express.
FTX’s ongoing legal issues
Once regarded as a major international cryptocurrency exchange, the crypto exchange suffered a serious setback last November when it was revealed that its founder and former CEO, Sam Bankman-Fried, had engaged in dubious business practices.
The exchange’s abrupt collapse was caused by its inability to withstand the sudden withdrawal pressures. Sam Bankman-Fried is being prosecuted on numerous criminal and civil counts in the US due to the collapse.
In addition, several other high-ranking the exchange’s associates have previously entered guilty pleas to accusations that were brought against them.Regulations against FTX did not just apply to Australia.
Cyprus suspended the operational license for the exchange on November 11, 2022, and it will remain suspended until the end of September 2023.
Despite complicated bankruptcy proceedings, the exchange’s companies have started restoring consumer cash. For instance, FTX Japan started withdrawals on February 21, 2023 in response to an enormous demand from consumers who wanted access to their money.
FTX’s European affiliate also launched a dedicated withdrawal page, albeit particular data was not provided. The Australian subsidiary’s administrators have not yet officially affirmed the repatriation of consumer money.
