“ASIC Revokes License of FTX Australia, Cites Criminal Lawsuit Against FTX Founder”
WHAT YOU SHOULD KNOW
- ASIC has canceled the license of FTX’s Australian subsidiary, a crypto exchange, after FTX’s founder, Sam Bankman-Fried, faced a criminal lawsuit by the U.S. government for alleged fraud, to which he has pleaded not guilty.
- Despite the license revocation, FTX Australia will be allowed to provide limited financial services until July 12, 2024, specifically for terminating existing derivatives with clients.
- The cancellation does not affect FTX Australia’s membership in the Australian Financial Complaints Authority and its obligations to have compensation arrangements for retail clients.
The Australian Securities & Investments Commission (ASIC) has taken the significant step of revoking the license of FTX’s Australian subsidiary, a cryptocurrency exchange that offered services for various cryptocurrencies, including Bitcoin and Ethereum. According to Reuters, the license cancellation is set to take effect on July 14. This action comes after FTX, once a prominent player in the crypto industry with a valuation of $32 billion in January 2023, filed for bankruptcy protection in the United States last November. The company cited its inability to fully repay customers who had deposited funds on its exchange as the reason for seeking bankruptcy protection.
Adding to FTX’s troubles, its founder, Sam Bankman-Fried, is currently facing a criminal lawsuit from the U.S. government for alleged fraud, to which he has pleaded not guilty. Amidst these legal challenges and financial woes, FTX Australia will have its license revoked but has been granted the ability to provide limited financial services until July 12, 2024, solely for terminating existing derivatives with its clients.
Despite the license cancellation, FTX Australia will still be required to fulfill its obligations as a member of the Australian Financial Complaints Authority and to maintain arrangements for compensating its retail clients. This move by ASIC highlights the regulatory scrutiny faced by crypto exchanges, and it comes as FTX and its founder are entangled in a complex legal situation, raising concerns about the safety and accountability of cryptocurrency platforms for investors and customers.
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