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Australia's Corporate Watchdog Suspends FTX Australia's Financial Services License

Australia's Corporate Watchdog Suspends FTX Australia's Financial Services License

FTX Australia’s customer-facing operation was established only about eight months ago.

Written by Shomik Sen Bhattacharjee, Edited by Siddharth Suvarna | Updated: 16 November 2022 17:04 IST

Australia's Corporate Watchdog Suspends FTX Australia's Financial Services License

Photo Credit: Unsplash/ Amber Weir

The suspension of FTX Australia’s operations comes eight months after it was established

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Highlights

FTX Australia’s permit to deal in derivatives trading has been removed
FTX Australia can continue to offer limited financial services
FTX collapsed last week as traders rushed to withdraw their funds

Australia's corporate watchdog, the Australian Securities and Investment Commission (ASIC), has suspended the financial services licence of the local arm of collapsed cryptocurrency exchange FTX. FTX Australia can continue to offer "limited financial services that relate to the termination of existing derivatives with clients" until December 19, as per a statement issued by ASIC. The company was placed into voluntary administration on November 11 after its parent company, FTX Trading, and certain other affiliated companies filed for Chapter 11 bankruptcy in the US.

Before the suspension takes effect, "FTX Australia's licence permitted it to deal in, make a market for and provide general advice relating to derivatives and foreign exchange contracts to retail and wholesale clients," the ASIC added in its statement.

"ASIC is monitoring this situation closely and speaking regularly with international regulators and the external administrators," the corporate regulator said. "ASIC encourages clients of FTX Australia to carefully monitor the situation and look out for updates by the FTX Group, as well as from FTX Australia's administrators on the KordaMentha website."

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FTX's fallout has affected crypto exchanges globally, including those in Australia. Brisbane-based exchange Digital Surge, for example, on November 16 stated that it has suspended withdrawals, citing spillover from the collapse of FTX. "Due to the impact of FTX Australia's administration, we are not able to operate business as usual and have suspended all deposits and withdrawals until further notice," Digital Surge said in a message on its website.

The move comes as Sam Bankman-Fried's crypto empire collapsed last week as traders rushed to withdraw their funds en masse in the face of FTX's $8 billion (roughly Rs. 64,945 crore) balance sheet shortfall.

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FTX launched FTX Australia in Sydney in March 2022. "We're excited to bring FTX's innovative products and services to the Australian marketplace," then-CEO Sam Bankman-Fried said at the time. "The establishment of FTX Australia should provide all our local clients with the confidence of trading on a registered and licensed platform."

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