As stated in a document by the regulator Australian Securities and Investments Commission (ASIC), the introduction of FTX in Australia around March 2022 was addressed internally by the regulator, with concerns raised about the validity of return on investment promises.
The staff was concerned after hearing a rumor that FTX would enable consumers to acquire cryptocurrency with margin loans of up to 20 times their initial investment.
It was stated that on March 30, authorities conducted a phone discussion with executives from the exchange. During this call, the cryptocurrency company discussed its attempts to regulate the industry and vowed to alert customers about the fraud.
Despite this, regulators continued to express worry over the company. The Australian Securities and Investments Commission (ASIC) would send three notifications to FTX Australia in the following months, each one requesting further information regarding the company’s activities.
In response to the freedom of information request, these notifications were withheld on the grounds that their disclosure might obstruct the work of the Australian Securities and Investments Commission (ASIC).
Emails that were circulated internally inside the agency as recently as October make reference to ongoing concerns over FTX Australia.
The launch of FTX Australia
FTX Australia initiated the process of turning over management to qualified insolvency practitioners by initiating the appointment of administrators on the 11th of November, 2022, hours before the company filed for bankruptcy protection in the United States.
Shortly after that, the government of Australia took steps to increase security surrounding cryptocurrency. About 30,000 of the company’s clients are owed either money or bitcoin by the exchange.
Stephen Jones, Australia’s Assistant Treasurer, fought back against ASIC’s proposal that it lacked the jurisdiction to intervene in the financial services license of the failed crypto exchange in December 2022.
ASIC had said that it did not have the authority to do so. Jones said that ASIC already has a significant amount of ability to suspend, terminate, or otherwise alter an Australian Financial Services License.
Since March 2022, ASIC has been inquiring with FTX Australia regarding the various financial products that FTX Australia has available for purchase.
According to a spokeswoman for the ASIC, the problems that were brought up included price, FTX Australia’s compliance with ASIC’s CFD product intervention order, and its onboarding of customers.
Australia tightening regulation after FTX collapse
As stated by the Australian Treasury at the end of last year, a crypto licensing and regulatory framework is expected to be in place sometime this year.
The action was taken as a part of a strategy to modernize Australia’s financial system and comes in the aftermath of the collapse of FTX, which compelled the management of its Australian firms to give over authority to licensed insolvency practitioners who objectively examine the financial condition.
According to the release, one of the next actions the government will take is to develop proper custody and licensing arrangements to protect customers.
As part of its continuing token mapping research, the government will determine whether tokens or digital assets should be subject to regulation under financial services regulations.
