ASIC has been keeping an eye on FTX since March 2022.
The Australian Securities and Investments Commission (ASIC), an independent commission of the Australian Government tasked as the national corporate regulator, was reportedly concerned about the FTX’s local subsidiary months before its downfall.
According to the news reports shared by the Guardian Australia, the country's financial regulator was reportedly looking into FTX six to eight months before it filed for bankruptcy.
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The concerns were raised after, at the end of 2021, FTX purchased financial institution IFS Markets and automatically acquired the Australian financial services license (AFSL). The FTX subsidiary officially started operations in Australia in March 2022.
Financial regulators were concerned that this way, FTX avoided the extensive scrutiny each firm faces before receiving the license.
In March 2022, after FTX started to operate in Australia, ASIC issued an s912C notice. The notice was delivered to obtain specific information about the firm and determine whether it can hold the AFSL.
The document obtained by the Guardian Australia revealed that ASIC aimed to acquire detailed information about what financial services FTX Australia are providing and determine whether it satisfies the “fit and proper person test.”
In April, ASIC issued an internal market note to examine documents to “further understand whether offerings comply with the license conditions and client money obligations.”
During the whole process, it is believed that the Australian financial regulator issued three notices to the crypto exchange FTX. The Australian Securities and Investments Commission refused to reveal FTX’s responses as it “could reasonably be expected to prejudice Asic’s law enforcement activities concerning market misconduct matters.”
Regarding the matter, the Australian Securities and Investments Commission spokesperson noted:
Since March 2022, Asic had made enquiries with FTX Australia about the financial products offered by FTX Australia. The issues raised included pricing, FTX Australia’s compliance with Asic’s <contract for differences> product intervention order and its on-boarding of clients.
The documents also revealed that the Australian regulator was concerned about the FTX Australian subsidiary until October 2022. The financial regulator confirmed that it had FTX under “surveillance activity” since March 2022.