On Wednesday, the Australia Securities and Investments Commission (ASIC) resolved to cancel the financial license of FTX subsidiary in the country. In a press statement, the regulator confirmed the cancellation took effect on July 14 but the local firm will still be eligible to offer limited financial services to its clients in the country until 2024. Prior to this cancellation, ASIC had earlier suspended the license of the entity.
According to findings, the regulator initially suspended the license around November 2022. The suspension surfaced a few days after the Bahamian-based exchange filed for bankruptcy on November 11, 2022. Then, ASIC, just like other regulators, across the globe, commenced investigations as regards the circumstances that led to the fall of the exchange.
Meanwhile, FTX Australia, is expected to terminate existing derivatives positions with client’s before the deadline. More so, it must make arrangement for compensation of retail clients affected by its collapse. Worthy of note that FTX has about 30,000 retail clients in the country and has before its collapse, rendered services to about 132 local companies. However, the cancellation of the firm’s license will not affect its membership of the Australian Financial Complaint Authority.
Shortly after FTX filed for bankruptcy, John Mouawad, Scott Langdon and Rahul Goyal of KordaMentha were appointed as voluntary administrators to help restructure its business. Meanwhile, the FTX global entity chief, during a United States bankruptcy Court sitting last month, confirmed the recovery of about $7 billion in liquid asset. The chief told the Court that not less than $8.7 billion worth of clients’ assets was reportedly misappropriated.
Ongoing probe into the collapse of FTX in U.S.
Apart from the ASIC, the U.S. regulator has also shown a remarkable commitment to probing the collapse of the exchange. Barely a few month ago, it charged the executives for allegedly defrauding investors with FTX exchange. The executives involved include former Alameda Research CEO, Caroline Ellison, Former FTX co-founders, Gary Wang and Sam Bankman-fried. Then, the SEC said the executives masterminded a multi-year scheme that duped investors of their funds. In the filing, the regulator said by so doing, they violated the security laws in the country. Both Wang and Ellison pleaded guilty to the charges and pledged to work with investigators.
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