The Australian Securities and Investments Commission (ASIC) has taken decisive action by officially revoking the financial license of FTX Australia, a local subsidiary of the popular cryptocurrency exchange, FTX. This move comes as the collapsed platform struggles with its financial standing after filing for bankruptcy in November 2022. Despite the license cancellation, FTX Australia will be permitted to offer limited financial services to its clients until July 12 next year. The regulator’s decision reflects ongoing efforts to protect customers and ensure adequate compensation for those impacted by the exchange’s troubles.

ASIC Acts as FTX Australia’s License is Cancelled

The ASIC’s announcement on July 19 marked the formal cancellation of its branch in Australia’s financial license, with the revocation taking effect from July 14. However, the exchange is still obligated to provide essential financial services to its customers until July 12, 2024. This interim period will allow the company to complete its outstanding dealings with clients while ensuring that adequate compensation arrangements are made.

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The exchange in Australia was servicing around 30,000 retail clients and had partnerships with 132 local companies. These clients will now have to carefully monitor the situation as the exchange winds down its operations and compensation procedures. The ASIC’s move aims to protect the interests of these customers and holds FTX Australia accountable for any potential shortcomings.

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Background of Troubles: From Suspension to Bankruptcy

Ftx Australia

The ASIC’s decision to revoke FTX Australia’s financial license comes after it suspended the exchange’s Australian Financial Services (AFS) license in November 2022. This suspension prevented FTX Australia from offering derivatives and foreign exchange contracts to its domestic clients. Just days after this suspension, FTX’s parent company, based in the Bahamas, filed for bankruptcy on November 11, 2022.

To aid in restructuring efforts, voluntary administrators from the Sydney-based investment and advisory firm, KordaMentha, were appointed to oversee the affairs of both FTX Australia and its subsidiary, FTX Express. These administrators have been working diligently to recover assets and repay creditors and customers who have been affected by the exchange’s financial challenges.

FTX’s Recovery Efforts and the Prospects of “FTX 2.0”

Since the bankruptcy filing, FTX’s new management has been hard at work recovering the company’s losses and repaying debts. In a recent report to a United States bankruptcy court, the restructuring chief for FTX’s global entity revealed that they have recovered approximately $7 billion in liquid assets. However, it is estimated that a staggering $8.7 billion worth of customer assets were potentially misappropriated.

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Despite these setbacks, FTX has been exploring the possibility of re-launching as an entirely new exchange, often referred to as “FTX 2.0”. The restructuring team has been in discussions with parties interested in financially supporting this reboot, which could present a fresh opportunity for the embattled exchange to generate revenue and improve its ability to compensate customers.

Read more: FTX Relaunch Effort Amidst Controversy and Bankruptcy

Conclusion

The Australian Securities and Investments Commission’s decision to cancel FTX Australia’s financial license is a significant development in the ongoing restructuring efforts of the exchange. The regulatory move aims to protect customers and ensure they receive the compensation they deserve. While FTX faces challenges ahead, the potential re-launch as “FTX 2.0” signals a glimmer of hope for a fresh start for the once-prominent crypto exchange. Customers and stakeholders will closely monitor the unfolding developments in the coming months to assess the future of FTX and its ability to regain its footing in the cryptocurrency market.

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