Starting on July 14, 30,000 Australian clients will be affected by the decision of the Australian Securities and Investments Commission (ASIC) to revoke the financial services licence of FTX’s Australian subsidiary.
The loss of their exchange licence means FTX Australia can no longer do business there. However, until July 12 of next year, it may still offer limited services to compensate its 30,000 retail customers and 132 local businesses.
After FTX Australia filed for Chapter 11 bankruptcy in the United States in November, the exchange’s licence was stopped until May of 2023. With this latest cancellation, FTX in Australia has been more thoroughly discredited.
After the failure of the FTX exchange, Australia has taken a harder stance against crypto trading platforms. The National Australia Bank froze funds destined for “high-risk” cryptocurrency exchanges on July 17. Fearing significant risks of fraud, other big banks in the country have been seeking to limit customer access to cryptocurrency platforms.
The FTX exchange has been under investigation by Australian authorities since March 2022, well before its collapse. After FTX advertised margin loan trading with up to 20x leverage for the Australian market, the ASIC started looking into the matter.
However, once the FTX collapsed in November, substantial doubts were raised as information regarding the ASIC inquiry became public. Twitter users have complained that ASIC’s measures to safeguard clients from the defunct exchange “were not enough.”
FTX Australia may still be able to take part in the relaunch of the FTX.com exchange, which was suggested last month by the company’s new chief executive officer, John J. Ray III, even if the licence is revoked.
According to the rumour mill, Ray has been in discussions with investors to refinance the bankrupt crypto firm and provide compensation to select existing customers in the form of equity holdings in the reorganised business. It’s not quite clear if FTX customers in Australia have a case in Australia or the United States.
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