Australia’s financial regulator reportedly raised concerns over FTX’s local Australian subsidiary as much as eight months before the exchange met its untimely end in November.
According to documents obtained by Guardian Australia, officers of 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 through a company takeover.
As per a previous report from Cointelegraph, FTX acquired its Australian financial services license (AFSL) by taking over financial institution IFS Markets in December 2021 before opening up for business months later in March 2022.
This is allowed FTX Australia to effectively sidestep the same level of scrutiny that is usually applied to new AFSL licensees, according to its ASIC chief Joe Longo.
As per newly obtained documents, the regulator reportedly issued a Sect 912C notice to FTX the same month it began operating, which required the crypto exchange to provide documents about its operations for ASIC to assess if it met AFSL license conditions.
With the notice, ASIC can direct the licensee to provide documents specifying what financial services they provide, the financial services business carried on 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 in the months between the initial concern and FTX collapsing on Nov. 11, the regulator had put the exchange under “surveillance activity” and a total of three notices were issued to FTX.
The document schedule also reveals that the regulator was still concerned about FTXs operations as late as October 2022.
Cointelegraph reached out to ASIC for a comment but did not receive a response before publication.
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FTX Australia was one of more than 130 FTX-linked companies that halted operations after its parent company FTX went into bankruptcy proceedings on Nov. 11, 2022.
The Australian subsidiary of FTX had its financial license suspended on Nov. 16, 2022, and has gone into voluntary administration.
It's estimated around 30,000 Australian customers and 132 companies are owed money or crypto from the exchange.