ASIC cancels AFS license of FTX Australia after being suspended since bankruptcy

Rick Steves

The Australian Securities and Investments Commission has canceled the Australian Financial Services (AFS) license held by FTX Australia Pty Ltd (FTX Australia), effective from 14 July 2023.

Sam Bankman-Fried

The move came many months after the collapse of FTX in November 2022 and the appointment, on 11 November, of John Mouawad, Scott Langdon, and Rahul Goyal of KordaMentha as voluntary administrators of FTX Australia and its subsidiary, FTX Express Pty Ltd, which operates a digital currency exchange not regulated by ASIC.

On 14 November 2022, ASIC suspended FTX Australia’s AFS license until 15 May 2023 (22-316MR), which was subsequently extended to 24 July 2023.

According to ASIC, the terms of the cancellation include provisions that, until the end of 12 July 2024:

  • FTX Australia may provide limited financial services that relate to the termination of existing derivatives with clients; and
  • the cancellation has no effect on the requirements for FTX Australia to continue as a member of the Australian Financial Complaints Authority, and to have arrangements for compensating retail clients.

FTX hasn’t been forgotten

During the several months since the collapse of FTX, the name of the crypto exchange continues to come up either as an example of a bad apple or in court rulings.

Last week, Binance’s CZ wrote a sentimental message to the community marking the crypto exchange’s sixth anniversary. There, he also reflected on how he feuded with Sam Bankman-Fried before FTX collapsed in stunning fashion in late 2022. “When FTX crashed we tried to help. We signed a LOI to do a deep DD (due diligence) but soon found we couldn’t get involved in the deal. That was the extent of our (non) involvement in the matter. Even then, a few regulators or news outlets tried really hard to group Binance and FTX together. To that, I will just say: We are different. Not every investment firm on Wall Street is Madoff.”

Earlier in June, US Bankruptcy Court Judge Lane rejected the request to include FTX in the settlement talks between Genesis and its creditors, where the bankrupt exchange claimed that Genesis owed them $3.9 billion. Instead, the judge granted the parties involved more time to develop a revised proposal that would determine how payments would be distributed to Genesis creditors.

On account of the CFTC’s approval of Cboe Digital to provide clearing services for digital asset futures on a margined basis for futures commission merchants, in addition to the fully collateralized futures and fully collateralized swaps previously authorized, CFTC Commissioner Romero said Cboe’s application stands in stark contrast to FTX’s application for a bespoke disintermediated direct-to-customer market structure. “The proposed FTX model was never adopted by the Commission, but it put at risk customers’ bankruptcy priority, other customer protections, and financial stability.”

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