Australian Regulator Raised Red Flags Months Before Collapse FTX Collapse

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According to a recent publication by the Australian Securities and Investments Commission (ASIC), the country’s market regulator has had internal discussions about FTX’s planned debut in Australia in March 2022. 

Some have expressed concern over the return on investment promises, as reported by The Guardian. The regulator also issued FTX a Section 912C notice in the same month, requiring the crypto exchange to disclose information on its activities and determine if it meets the requirements for an AFSL license. 

Request for documentation 

Through this notice, ASIC may request the licensee to provide documentation indicating the financial services offered and the nature of their financial services business to determine if they meet the “fit and suitable person” test.

The ASIC briefing document reveals that between the regulator’s initial concerns and FTX’s collapse on November 11, the exchange was placed under monitoring and received three notifications from ASIC. 

FTX obtained its AFSL in December 2021 by acquiring IFS Markets, ahead of its planned launch in March 2022. Chairman of ASIC, Joe Longo, noted that this allowed FTX Australia to bypass typical scrutiny for new AFSL licensees. 

The now-defunct firm committed to informing customers of fraudulent crypto transactions and cooperating with the Australian Federal Police in investigating crypto-related crimes.