Australia Cancels FTX License Amid Crypto Industry Turmoil

FTX License Cancellation in Australia

Australia's securities regulator has announced the cancellation of the local license for FTX, the U.S.-based cryptocurrency exchange, effective July 14. This decision follows the collapse of FTX, which had once been a leading figure in the crypto industry with a staggering $32 billion valuation as of January 2023. The exchange filed for U.S. bankruptcy protection in November, citing inability to fully repay customer deposits.

Regulatory Scrutiny and Legal Challenges

The crypto industry has been under intense scrutiny from global regulators since FTX's downfall. The exchange's founder, Sam Bankman-Fried, is embroiled in a criminal lawsuit in the U.S. over alleged fraud, charges he denies. The Australian Securities & Investments Commission (ASIC) had already suspended FTX's license last November, impacting its ability to deal in derivative and foreign exchange contracts.

Limited Operations Until 2024

Despite the license cancellation, FTX Australia is permitted to offer limited financial services to terminate existing derivatives with clients until July 12, 2024. This ensures a controlled wind-down of operations while fulfilling client obligations. The company is also required to remain a member of the Australian Financial Complaints Authority and maintain compensation arrangements for retail clients.

Industry Impact

The revocation of FTX's license in Australia underscores the growing regulatory challenges facing the cryptocurrency sector. As the industry grapples with increased oversight and legal hurdles, the future of crypto exchanges remains uncertain. FTX has not provided a comment regarding the recent developments.