The Australian financial services regulator, the Australian Securities and Investments Commission (ASIC), has officially revoked the financial license of FTX Australia, the local subsidiary of the bankrupt crypto exchange FTX.
The cancellation was announced by ASIC on July 19, and it came into effect on July 14. However, despite the license being canceled, FTX Australia will still be permitted to offer limited financial services as it finalizes its affairs with clients until July 12 of the following year. During this period, the exchange will also be required to make arrangements for compensating its clients, as directed by the regulator. FTX Australia had been catering to approximately 30,000 retail clients and serving 132 local companies.
The issues leading to the license revocation began in November when ASIC suspended FTX Australia’s Australian Financial Services (AFS) license. This license allowed the exchange to offer derivatives and foreign exchange contracts to its local clientele. The suspension came shortly after the main entity, FTX, filed for bankruptcy on November 11, 2022.
Following FTX’s bankruptcy, the Sydney-based investment and advisory firm KordaMentha was appointed as voluntary administrators to assist in restructuring both FTX Australia and its subsidiary, FTX Express.
In a recent report submitted to a United States bankruptcy court, the restructuring chief for FTX’s global entity revealed that around $7 billion in liquid assets had been recovered. However, an estimated $8.7 billion worth of customer assets were allegedly misappropriated.
Despite the challenging situation, there are discussions taking place between FTX’s restructuring team and potential parties interested in financially supporting a potential relaunch of the exchange. If successful, FTX could emerge as an entirely new exchange in the future.
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