Key Points:
Australian regulator cancels FTX Australia’s financial license after the bankruptcy filing.
FTX Australia must still compensate clients, with an estimated $8.7B in customer assets allegedly misappropriated.
FTX may re-launch as a new exchange, with talks ongoing for potential financial backing.
The Australian financial services regulator has made a significant move by canceling the financial license of FTX Australia, which is the local subsidiary of the bankrupt crypto exchange.
The cancellation, which was effective on July 14, was announced by the Australian Securities and Investments Commission (ASIC) on July 19. According to ASIC, FTX Australia will still be allowed to provide limited financial services until July 12 next year while it wraps up its dealings with clients. However, it would still be bound to make arrangements for compensating clients until that time.
ASIC has cancelled the Australian financial services licence held by FTX Australia https://t.co/Gsmsg9XcYj
— ASIC Media (@asicmedia) July 19, 2023
FTX Australia had around 30,000 retail clients and serviced 132 local companies, which means that the cancellation of the financial license would significantly impact these clients and companies. Back in November 2022, ASIC suspended FTX Australia’s Australian Financial Services (AFS) license, which allowed it to create derivatives and foreign exchange contracts to local clients. The suspension came a few days after the Bahamian-based FTX filed for bankruptcy on November 11, 2022.
FTX Express, voluntary administrators from the Sydney-based investment and advisory firm KordaMentha were appointed on the same day as FTX’s bankruptcy. In a report to a United States bankruptcy court last month, the restructuring chief for FTX’s global entity said that they had recovered around $7 billion in liquid assets. However, an estimated total of $8.7 billion worth of customer assets were allegedly misappropriated.
Despite the cancellation of its financial license, FTX could re-launch as an entirely new exchange. Its restructuring team is currently holding talks with parties that may be interested in financially backing such a reboot. This is a significant development that could give hope to FTX’s clients, as they could potentially recover some of their lost assets if the exchange is successfully re-launched with new financial backing.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Read more...
Coincu News
