ASIC suspends AFS license of FTX Australia amid crypto exchange meltdown

Rick Steves

ASIC, the Australian financial watchdog, has announced the suspension of AFS licence 323193, held by FTX Australia Pty Ltd, a subsidiary of the crypto exchange operator that went bankrupt a few days ago.

Sam Bankman-Fried

The Australian financial services license held by FTX Australia allowed the firm to deal in, make a market for and provide general advice relating to derivatives and foreign exchange contracts to retail and wholesale clients.

It will now be suspended until 15 May 2023 after it was placed into voluntary administration on 11 November 2022.

The company, however, is allowed to continue to provide limited financial services that relate to the termination of existing derivatives with clients, until 19 December 2022.

KordaMentha execs appointed as voluntary administrators of FTX Australia

John Mouawad, Scott Langdon, and Rahul Goyal of KordaMentha were appointed as voluntary administrators of FTX Australia and its subsidiary FTX Express Pty Ltd, which operates a digital currency exchange that is not regulated by ASIC.

FTX Trading Limited, West Realm Shires Services Inc (trading as FTX US), and certain other affiliated companies commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code.

FTX Trading Limited became the ultimate holding company of FTX Australia on 23 September 2021.

The Australian Securities and Investment Commission said it is monitoring the situation closely and speaking regularly with international regulators and the external administrators from KordaMentha.

FTX Australia were encouraged to carefully monitor the situation and look out for updates from the FTX Group, as well as from FTX Australia’s administrators on the KordaMentha website.

FCA won’t protect FTX customers in the United Kingdom

Yesterday, the UK Financial Conduct Authority reminded consumers that FTX customers residents in the UK were not protected by its regulatory powers. The City watchdog emphasized that anyone who deals with an unauthorized firm like FTX is not protected by the UK lifeboat scheme, and thus cannot complain to the Financial Ombudsman Service. Instead, the FCA offered UK investors only a link to a general financial advice hotline for help.

“Any FTX customers who have financial concerns can receive free, impartial financial guidance from Moneyhelper. In the UK, regulation of cryptoassets is limited to registering of UK-based crypto-asset exchanges for anti-money laundering purposes. As a result, FTX was not authorised, regulated or registered by the FCA,” it said.

Earlier in September, the top financial regulator in the United Kingdom said FTX does not have the necessary license to provide products or services in the country. At the time, the FCA warned that FTX “is targeting people in the UK” who are later unlikely to get their money back in case of a financial loss. That, obviously, came to true.

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