• Australian Authorities raised alarm over FTX months before its collapse.
• ASIC issued 3 notices to FTX between April to October 2022.
• The collapse of FTX affected more than 130 firms, including FTX Australia.

Australian Authorities Raised Alarm Over FTX

Australian authorities were concerned about the activities of cryptocurrency exchange FTX prior to its eventual collapse. The Australian Securities and Investments Commission (ASIC) issued three notices to FTX between April to October 2022 for failing to comply with the Australian Financial Services License (AFSL). Furthermore, regulators questioned the business practices of bankrupt cryptocurrency exchange FTX just a few weeks after it commenced operation in the country and six months before its eventual collapse.

Issued Notices by ASIC

The ASIC issued an s912C notice to the cryptocurrency exchange in April 2022 which required them disclose details guiding its business operation in order to determine if they can obtain AFSL. Additionally, prices of crypto assets on FTX worried the regulators as they reportedly offered customers margin loans up to 20 times their investment. Other issues that prompted ASIC’s monitoring include onboarding users and compliance with product intervention order.

FTX’s Collapse

The collapse of FTX resulted in their Australian branch ceasing withdrawal on November 11th, leading ASIC withdraw operational license of FTX and commence investigation for “suspected contraventions of corporations legislation”. This intensified crypto winter’s effect on projects and investors in industry as more than 130 firms were affected, including itself. Reports indicated that Japanese users are likely retrieve funds early this year but $9 billion is still at stake as creditors push reclaim assets via legal filings.

Conclusion

FTX was under surveillance by Australian authorities six months before its collapse due various misgivings such as offering customers margin loan up 20x their investment, onboarding users and compliance with product intervention order etc., resulting in ASIC issuing 3 notices prior its collapse which affected more than 130 companies including itself . However , reports suggest that Japanese users are likely access funds early this year though $9 billion is still at stake for creditors who are pushing reclaim assets via legal filings .