The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services (AFS) licence of FTX Australia Pty Ltd (FTX Australia). The cancellation comes after FTX Australia was placed into voluntary administration on 11 November 2022. ASIC suspended FTX Australia’s AFS licence on 14 November 2022, and the suspension was subsequently extended to 24 July 2023.
The loss of FTX Australia’s AFS licence is a significant event in the Australian cryptocurrency industry. The company had been one of the largest cryptocurrency exchanges in Australia, and its collapse has left many investors and customers in the lurch.
There are a number of factors that contributed to the loss of FTX Australia’s AFS licence. One factor was the broader decline in the cryptocurrency market. In 2022, the price of Bitcoin and other cryptocurrencies fell sharply, which led to a decline in trading volumes on cryptocurrency exchanges. This decline in trading volumes put a strain on FTX Australia’s finances.
Another factor that contributed to the loss of FTX Australia’s AFS licence was the company’s business model. FTX Australia was a leverage trading platform, which means that it allowed customers to trade cryptocurrency with borrowed funds. This business model is inherently risky, and it can lead to losses if the price of cryptocurrency falls sharply.
In addition to these factors, there were also some concerns about the management of FTX Australia. In particular, there were allegations that the company had been engaged in misleading and deceptive conduct. These allegations were investigated by ASIC, but no charges were ultimately laid.
The loss of FTX Australia’s AFS licence is a significant step by ASIC. It sends a clear message that ASIC will not tolerate financial services providers that do not meet their obligations. It also provides some measure of protection for consumers who were affected by the collapse of FTX Australia.
The cancellation of FTX Australia’s AFS licence is a major blow to the Australian cryptocurrency industry. The company’s collapse has shaken the confidence of investors and customers in the industry, and it has raised questions about the regulation of cryptocurrency exchanges in Australia.
The collapse of FTX Australia is a warning to other cryptocurrency exchanges that they need to be aware of the risks involved in this industry. If they do not meet their obligations, they could face the same fate as FTX Australia.
