ASIC had Concerns About FTX Australia Months Prior to Collapse
- The ASIC had concerns regarding the operations of FTX Australia long before the collapse and bankruptcy filing in November 2022.
- The concerns started the day FTX secured licensing to operate in Australia with the help of the takeover of IFS Markets in December 2021.
- ASIC issued a Section 912C notice to FTX Australia the same month it began its operations in the region.
- Between the intitial concerns and bankruptcy filing in November, the regulator issued three notices to FTX.
Australia is gradually becoming a ground for crypto entrepreneurs and investors as many companies have set up shops in the region, providing blockchain-focused services to their customers. Interestingly, the now-bankrupt crypto exchange FTX also had a subsidiary operating in the region, which attracted the attention of the Australian Securities and Investments Commission, or ASIC, which is the financial markets regulator in the region.
As per the documents seen by Guardian Australia, the ASIC had concerns regarding the operations of FTX Australia, the exchange’s Australian arm, long before the collapse and eventual bankruptcy filing of the exchange in November 2022 under the leadership of its founder and former CEO, Sam Bankman-Fried, also known as SBF in the crypto space. Along with the exchange, more than 130 firms related to it also filed for Chapter 11 bankruptcy.
Additionally, the ASIC had concerns, which started the day FTX secured licensing to operate in Australia with the help of a takeover. FTX acquired IFS Markets in December 2021, which provided it with an Australian Financial Services License (AFSL) after going through rigorous background checks. This was a loophole in the law which was called out by Joseph Longo, the chairman of the ASIC.
During a joint parliamentary committee on corporations and financial services in December 2022, Longo stated that ASIC had no legal grounding when it came to the investigation of FTX Australia because of a loophole in the law that allowed the exchange to bypass security checks. Interestingly, FTX Australia opened for business in March 2022, planning to dominate the entire market in the near future.
Interestingly, as per the documents, ASIC issued a Section 912C notice to FTX Australia the same month it began its operations in the region over concerns regarding the firm’s operations. Moreover, the regulator wanted the exchange to provide more information regarding its operations, which would be used to determine if FTX Australia satisfies the criteria needed to operate in the region with the AFSL license.
This notice gives ASIC the power to order any licensee to provide more details on its finances and business operations so that the regulator can find out if the licensee actually satisfies a “fit and proper person test.” Moreover, the document obtained also revealed that between the regulator’s initial concerns regarding the operations of FTX Australia and the exchange’s implosion in the coming months, a total of three notices were issued to the crypto trading platform.
The exchange was also put under “surveillance activity,” confirming that the crypto company’s activities were not up to ASIC’s standards. As late as October, the regulator continued to show concerns regarding the operations and the way they were carried out by FTX.
As reported earlier by Bitnation, FTX Bankman-Fried is in trouble after he recently tried to contact the current general counsel of FTX US, the US arm of the exchange. Moreover, SBF’s family is also set to undergo interrogation under oath.
A 115-page document was released that contained the names of all the people affected by the collapse of FTX, including 9.7 million (9,693,985) customers. The exchange owes substantial sums of money to big tech players, local businesses situated in its Bahamian headquarters, airlines, charities, and media firms.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
