Cyprus Prolongs the Suspension of FTX’s European Arm Additional Six Months Crypto Regulation

The Cyprus Securities and Exchange Commission (CySEC) has extended the prohibition of FTX’s European division, FTX Europe, for an additional six months.

November 5 marked the announcement of the decision, which will result in the firm’s inability to operate until at least May 30, 2025.

The extension forbids FTX EU from accepting new clients, advertising, or offering services. However, it permits the platform to conclude transactions and refund funds to existing Clients.

This is the fourth suspension extension since CySEC initially suspended FTX Europe’s operations in November 2022, in response to FTX’s bankruptcy in the United States.

FTX had only been operating in the European market for eight months at that time, providing regulated investment services for multi-asset derivatives.

CySEC’s initial suspension was based on concerns regarding FTX Europe’s management and underscored the necessity of safeguarding client assets in the context of the company’s financial crisis in the United States.

In 2021, FTX acquired FTX Europe, which was previously known as Digital Assets AG, for $323 million. The restructuring team of FTX subsequently scrutinized the acquisition, contending that the price was substantially exaggerated.

In February 2024, FTX acquired FTX Europe from its original proprietors for $32.7 million, which resolved any legal disputes regarding the acquisition.

Rather, it offers users a portal that enables them to view their balances and request withdrawals. CySEC regulations mandate that funds remaining in user accounts will be maintained in a “client segregated account” for a period of six years if they are not withdrawn.

In the meantime, the Justice Department in the United States is requesting the return of up to $13.25 million in political contributions associated with former FTX executives, as disclosed in a recent federal court filing.

Judge Lewis Kaplan, who is responsible for the criminal proceedings against former FTX CEO Sam Bankman-Fried and his associates, has granted the government’s request for an extension until January 15 to negotiate with a variety of political action committees (PACs).

A group of doctors submitted an amicus brief last month in support of Sam Bankman-Fried’s appeal, asserting that his criminal trial may have been substantially influenced by his neurodivergence disorders.

The physicians stated that the FTX co-founder, who has been diagnosed with attention-deficit/hyperactivity disorder (ADHD) and autism spectrum disorder (ASD), encountered “severe challenges” during the court proceedings.

Several rulings during the trial were detrimental to Bankman-Fried as a result of his conditions, as emphasized in the brief, which was signed by eight neurodivergence specialists.

Concurrently with the amicus brief, a group of bankruptcy law professors submitted an additional filing that conveyed apprehensions regarding the confluence of Bankman-Fried’s criminal prosecution and FTX’s bankruptcy case.

The professors contended that the cooperation between the FTX bankruptcy estate and the prosecution could establish a “dangerous precedent,” which could encourage the use of Chapter 11 proceedings to enhance parallel criminal prosecutions, despite their refusal to approve either party.

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