The local branch of the bankrupt cryptocurrency exchange FTX, FTX Australia, has had its financial license revoked by the Australian Financial Services Authority. The Australian Securities and Investments Commission (ASIC) released the announcement on July 19, with the cancellation effective July 14.
FTX Australia must make arrangements to pay its customers between now and July 12 of the next year, during which time it will be able to offer restricted financial services.
ASIC chose to revoke FTX Australia’s Australian Financial Services (AFS) license after suspending it in November. With this green light, the firm might start offering futures and FX transactions to its domestic clientele. The suspension happened on November 11, 2022, the same day that FTX, based in the Bahamas, filed for bankruptcy.
KordaMentha, a Sydney-based company, was appointed as voluntary administrators to aid in the reconstruction of FTX Australia and its subsidiary, FTX Express, after FTX’s bankruptcy filing. The global head of FTX’s restructuring team recently submitted a report with a US bankruptcy court detailing the recovery of around $7 billion in cash assets. However, some $8.7 billion in customer funds were allegedly stolen.
There have been rumors that FTX is in talks with potential financial sponsors as part of a restructuring effort to relaunch as a whole new exchange.
In Australia, FTX provided services to over 30,000 individual customers and 132 establishments. The subsidiary will make every effort to end its connections with its customers and remain obligated to compensate them in the weeks leading up to July 12 of next year. As a crucial turning point in the bankruptcy of FTX, the loss of its banking license highlights the regulatory oversight of the cryptocurrency exchange.
It remains to be seen how FTX will reinvent itself and earn the trust of both investors and regulators as the exchange mulls over a fresh start. The cryptocurrency community and market experts will be keeping a close eye on the outcomes of the ongoing discussions and the potential relaunch of FTX.
Because of this, FTX Australia and its clients face an unclear future until the company’s reorganization efforts are finalized and a new operational framework is established.
