ASIC suspends financial services licence of FTX Australia

The Australian Securities and Investments Commission (ASIC) has suspended the Australian financial services licence of FTX Australia until 15 May 2023 after it was placed into voluntary administration on 11 November 2022.

This follows the downfall of the crypto exchange after Binance pulled out of a deal to acquire the company after discovering irregularities only last week. 

Shortly after that news, FTX experienced a significant hack with over US$600M allegedly being drained from user accounts.

Since then there has been a drop in Solana prices, possibly one million creditors from FTX and a few bad games of League of Legends. 

Until 19 December, ASIC said FTX Australia can continue to provide limited financial services that relate to the termination of existing derivatives with clients.

On 11 November, John Mouawad, Scott Langdon and Rahul Goyal of KordaMentha were appointed as voluntary administrators of FTX Australia and its subsidiary FTX Express, which operates a digital currency exchange that is not regulated by ASIC.

On the same day, FTX Trading Limited, West Realm Shires Services 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.

Prior to the suspension, 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.

ASIC said it is monitoring this situation closely and speaking regularly with international regulators and the external administrators.

The commission said it 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.

FTX Australia may apply to the Administrative Appeals Tribunal for a review of ASIC’s decision.