Australia’s ASIC Raised Alarm 8Months Before FTX’s Stunning Collapse

• The Australian regulators issued 3 notices to FTX and were surveilling the exchange in the 8 months before it collapsed.
• Internal emails sent within the regulator as late as October refer to “current concerns” about FTX Australia. 

The Australian Securities and Investments Commission (ASIC) had already raised concerns about the way FTX Australia was operating eight months before the $32 billion exchange filed for chapter 11 bankruptcy.

ASIC was concerned about the exchange’s pricing, onboarding of users, and compliance with ASIC’s product intervention order.

One of the first red flags raised was that FTX would allow customers to buy crypto with margin loans up to 20 times their investment. This is a risky practice that could lead to customers losing more money than they invested.

ASIC also expressed concerns about the way FTX onboarded users. The exchange did not require users to provide any identification information, which made it easy for criminals to use the platform.

Finally, ASIC was concerned that FTX was not complying with its product intervention order. This order was issued in response to the Terra collapse and requires cryptocurrency exchanges to provide more information to users about the risks involved in trading cryptocurrencies.

Despite these concerns, ASIC did not take any action to shut down FTX Australia. The exchange was allowed to continue operating until it filed for bankruptcy in November 2022.

The collapse of FTX Australia has left many customers out of pocket. It is estimated that approximately 30,000 Australian customers and 132 businesses are owed money or cryptocurrencies by the exchange.

ASIC is now investigating FTX Australia to determine whether any laws were broken. The regulator is also working to protect customers who are owed money by the exchange.

This case is a reminder of the risks associated with cryptocurrency trading. It is important to do your research before investing in any cryptocurrency, and to only use exchanges that are regulated by a reputable financial institution.