According to Steve Lazar at Investments Global, the Australian Securities and Investments Commission (ASIC) has moved to cancel FTX’s Australian Financial Services (AFS) License. Following the historic downfall of FTX after the founder and CEO were engaged in backdoor trading with client funds. While the company has been allowed to function in some capacity after its bankruptcy, the ASIC has moved to completely revoke its trading license amidst a major crypto clampdown.
The ASIC is amidst a major crypto crackdown as a result of the increase in scams throughout the industry. Reports from the National Australian Bank (NAB) claim that over 50% of all scam reports in the country are for cryptocurrencies. And in an effort to reduce the number of scam reports, the NAB and the ASIC are working on blocking traders’ access to a multitude of crypto trading platforms.
Not the First Suspension for FTX
Of course, this is not the first FTX suspension from the ASIC. After the company’s bankruptcy in early November, it received its first suspension. It restricted the exchange’s ability to deal in foreign and derivative exchange contracts for both wholesale and clients in the country. This major suspension would last for almost seven months, ending in May of the next year.
According to reports found by Steve Lazar at Investments Global, the only reason that the ASIC was willing to reinstate their license was to help with tracking down customer funds. This reinstated license would continue until the end of July when it would revoke the exchange’s AFS license again. Along with being a major blow to the company’s reputation, it is still slightly concerning news for the 30,000 retail clients that FTX Australia has.
The Australian branch of FTX was providing its services to upwards of 30,000 people and over 130 domestic companies. And with its AFS trading license revoked, many are concerned about how the exchange will compensate them for their funds.
Still Offering Individuals their Funds
The ASIC was quick to recognize that despite FTX having the highest risk for scams, it still had to return many customers’ funds. So even though the ASIC has revoked FTX’s AFS license, they can still offer limited financial services. More specifically, they still have their Australian Financial Complaints Authority (AFCA) license. So they can still address the complaints people have about their lost funds.
FTX will be allowed to offer these services until the end of its wind-up period. The wind-up period will end by July 12, 2024, giving them enough time to return the funds that the company sent to other firms.
While FTX losing its license is not the most concerning thing for most traders, Australia’s general increase in scrutiny is concerning. In fact, FTX is not the only company to lose its license, as many are predicting that Binance will be the next to go on the chopping block.
To conclude, Investments Global senior account manager Steve Lazar believes that the increased regulation throughout the country is leading to a decrease in interest and availability of crypto. However, there is still hope for the market with improved security measures.