Australia’s financial regulator was reportedly concerned about FTX’s local Australian subsidiary for eight months before the exchange closed in November.
According to documents obtained by Guardian Australia, officials of the Australian Securities and Investments Commission (ASIC) are concerned about the way FTX Australia operates because it could obtain a license in the country through a corporate takeover.
As previously reported by Cointelegraph, FTX obtained an Australian financial services license (AFSL) by taking over the financial institution IFS Markets in December 2021 before opening for business months later in March 2022.
This allowed FTX Australia to effectively sidestep the same level of scrutiny that is usually applied to new AFSL licenses, according to ASIC chief Joe Longo.
According to newly obtained documents, the regulator reportedly issued a Section 912C notice to FTX in the same month it began operations, which required the crypto exchange to provide documents about its operations to ASIC to assess whether it met the AFSL license requirements.
With that notice, ASIC can direct the licensee to provide documents that define what financial services are provided, the financial services business that the licensee is engaged in and to determine whether the licensee meets the “fit and proper person test.”
A briefing document obtained by the outlet has also confirmed that in the month between the initial concern and FTX collapse on November 11, the regulator has put the exchange under “surveillance activity” and a total of three notices were issued to FTX.
The schedule of the document also shows that the regulator is still concerned about the operation of FTX until October 2022.
Cointelegraph reached out to ASIC for comment but did not receive a response before publication.
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FTX Australia is one of more than 130 FTX-related companies to cease operations after FTX’s parent company enters bankruptcy proceedings on 11 November 2022.
FTX Australia’s subsidiary has been issued a financial license on 16 November 2022, and is in voluntary administration.
It is estimated that approximately 30,000 Australian customers and 132 companies owe money or crypto from the exchange.