Recently, the Australian financial services regulator has decided to revoke the financial license of FTX Australia, the local subsidiary of a cryptocurrency exchange that is now bankrupt. This license cancellation will officially take effect on July 14.
The Australian Securities and Investments Commission (ASIC) made the announcement on July 19. However, ASIC clarified that FTX Australia will still be allowed to provide limited financial services until July 12, 2024, in order to wrap up its affairs with its clients.
During this period, FTX Australia will be required by the regulator to make appropriate agreements to compensate its clients. The crypto exchange had around 30,000 retail clients and provided services to 132 local companies.
In November 2022, ASIC had initially suspended FTX Australia’s Australian Financial Services (AFS) license, which had granted the company the ability to offer derivatives and foreign exchange contracts to its local clients.
Shortly after FTX, which is based in the Bahamas, filed for bankruptcy on November 11, 2022, the operations of FTX Australia were also suspended. At the same time, administrators from the Sydney-based investment and advisory firm KordaMentha were appointed to assist in the restructuring of both FTX Australia and its subsidiary, FTX Express.
According to a recent report submitted to a United States bankruptcy court, the head of the restructuring efforts for FTX’s global entity revealed that approximately $7 billion in liquid assets had been recovered. However, it was alleged that customer assets totaling $8.7 billion had been misappropriated.
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