Australia’s Financial Regulator Revokes License of FTX’s Local Entity

Australia’s financial services regulator has officially revoked the financial license of FTX Australia, the local subsidiary of the bankrupt cryptocurrency exchange. The Australian Securities and Investments Commission (ASIC) announced the cancellation on July 19, with the revocation taking effect on July 14. However, FTX Australia will be permitted to offer limited financial services as it concludes its client-related operations until July 12 of the following year.

During this period, FTX Australia will be required to make appropriate arrangements for compensating its clients, as specified by the regulator. With approximately 30,000 retail clients and 132 local companies being serviced by FTX Australia, ensuring client compensation remains a crucial obligation.

The initial suspension of FTX Australia’s Australian Financial Services (AFS) license occurred in November. This license had authorized the creation of derivatives and foreign exchange contracts for local clients. The suspension coincided with FTX’s declaration of bankruptcy on November 11, 2022, originating from its Bahamian base.

Simultaneously with FTX’s bankruptcy filing, voluntary administrators from KordaMentha, an investment and advisory firm based in Sydney, were appointed to facilitate the restructuring process for FTX Australia and its subsidiary, FTX Express.

In a recent report submitted to a U.S. bankruptcy court, the restructuring chief overseeing FTX’s global entity disclosed that approximately $7 billion in liquid assets had been recovered. However, an estimated $8.7 billion worth of customer assets was allegedly misappropriated.

There have been reports suggesting that FTX may undergo a complete relaunch as an entirely new exchange. The restructuring team has reportedly engaged in discussions with potential parties interested in providing financial backing for such a reboot.

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