The Australian Securities and Investments Commission (ASIC) is investigating the Australian arms of FTX, one of the world’s largest cryptocurrency companies that spectacularly collapsed this week and sent the world’s crypto markets into a tailspin.
Crikey understands the financial watchdog is monitoring FTX’s developments and has engaged with FTX’s local entities about what this means for their operations.
FTX provided services to Australian customers through an AUSTRAC-registered digital currency exchange provider FTX Express Pty Ltd and also held an Australian financial services licence through FTX Australia Pty Ltd, according to an archived version of its website.
FTX is a cryptocurrency exchange — a business that allows people to trade traditional currency for cryptocurrencies — that was valued at US$32 billion earlier this year. The company was one of the major crypto success stories during the pandemic, when it went from earning US$90 million in revenue in 2020 to more than a billion dollars in 2021. FTX bought Australian start-ups IFS Group and Hive as part of its global expansion. CEO Sam Bankman-Fried, who founded another crypto firm Alameda Research and once had a personal net worth estimated at $26.5 billion, was crowned the “next Warren Buffett“.
This week that all changed. CEO Changpeng Zhao of Binance, another cryptocurrency exchange, tweeted on November 7 that the company would dump US$529 million worth of FTT, FTX’s own cryptocurrency, because of “recent revelations that came to light”.
This crashed the value of FTT, which subsequently led to a run on the exchange with customers trying to withdraw their assets out of fear it would collapse. This resulted in the company admitting it did not have enough liquidity to cover the withdrawals. It then placed limits on withdrawals.
While Zhao initially announced that Binance would buy FTX, the company soon backed out of the deal after seeing its books. This has left FTX in limbo as crypto prices tanked around the world and reports emerged of international regulators investigating the firm for potential securities violations.
FTX has been contacted for comment.
