The regulator reportedly issued a Sect 912C notice to FTX, which required the crypto exchange to provide documents about its operations for ASIC to assess if it met AFSL license conditions
The financial regulator of Australia reportedly raised concerns over the Australian subsidiary of FTX as much as eight months before the exchange collapsed in November.
As per documents obtained by Guardian Australia, the Australian Securities and Investments Commission (ASIC) were concerned about the way in which FTX Australia was operating as it was able to obtain a license in the country via a company takeover.
ASIC chief Joe Longo said, this allowed FTX Australia to effectively sidestep the same level of scrutiny that is usually applied to new AFSL licensees.
According to newly obtained documents, the regulator reportedly issued a Sect 912C notice to FTX in the month it began its operations, which required the crypto exchange to provide documents about its operations for ASIC to determine if it met the conditions for AFSL license.
With the notice, ASIC can direct the licensee to provide documents specifying the financial services they provide, the financial services business conducted by the licensee and to determine if the licensee satisfies the ‘fit and proper person test.’
A briefing document obtained by the outlet has also confirmed that the regulator had put the exchange under ‘surveillance activity’ and a total of three notices were issued to FTX during the time concerns were raised initially about FTX and its collapse on November 11.
The document schedule also reveals that the regulator was still concerned about the operations of FTX as late as October 2022.
FTX Australia was one of over 130 companies linked to FTX that halted operations after its parent firm FTX went into bankruptcy proceedings on November 11, 2022.
On Nov. 16, 2022, the financial license of the Australian subsidiary of FTX was suspended, and it has gone into voluntary administration.
It is estimated that the exchange owes money or crypto to around 30,000 Australian customers and 132 companies.
