FTX Australia, the local subsidiary of the bankrupt crypto exchange, has had its financial license canceled by the Australian financial services regulator.
The announcement was made by the Australian Securities and Investments Commission (ASIC) on July 19, and the cancellation came into effect on July 14.
However, FTX Australia will still be allowed to provide limited financial services until July 12 next year, as it wraps up its dealings with clients.
ASIC emphasized that FTX Australia is obligated to make arrangements for compensating clients until the specified date.
The exchange had approximately 30,000 retail clients and served 132 local companies, making the compensation process a significant undertaking.
In November of the previous year, ASIC had already suspended FTX Australia’s Australian Financial Services (AFS) license, which allowed the exchange to create derivatives and foreign exchange contracts for its local clients.
This suspension occurred shortly after the Bahamian-based parent company, FTX, filed for bankruptcy on November 11, 2022.
Following FTX’s bankruptcy filing, voluntary administrators from KordaMentha, an investment and advisory firm based in Sydney, were appointed to aid in the restructuring of FTX Australia and its subsidiary, FTX Express.
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In a recent report submitted to a United States bankruptcy court, the restructuring chief for 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 were allegedly misappropriated, indicating a significant shortfall.
There have been reports suggesting that FTX may re-launch as an entirely new exchange.
The restructuring team has been engaging in discussions with potential parties interested in providing financial backing for this potential reboot.
If successful, this relaunch could offer a fresh start for the troubled exchange.
As FTX Australia grapples with the cancellation of its financial license, it faces the challenging task of winding down its operations and compensating its clients.
The aftermath of the bankruptcy filing and the potential re-launch of FTX pose both uncertainties and possibilities for the future of the exchange and its stakeholders.
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