Before it collapsed, Australian authorities looked into the FTX cryptocurrency exchange; here's why.

It has come to light that the Australian Securities and Investments Commission (ASIC) has been looking into the once-vibrant FTX market since March 2022. More than 30,000 Australian individuals are attempting to recover individual deposits totaling up to $1 million (AUD). Prior to FTX's implosion on November 12, concerns are being raised about ASIC's involvement in the investigation into market wrongdoing at the company.

Emails made public by the Guardian demonstrate that FTX was being actively watched while investigations into the actions of the exchange were still ongoing. The records make clear that there are significant issues with asset pricing and adherence to the Australian Financial Services Licence (AFSL), which permitted transactions with Australian clients. After FTX offered margin loan trading with up to 20x leverage for the Australian market, investigations got under way in March 2022.

Investigators attended a teleconference with FTX on March 30 after being unable to acquire anticipated crucial documentation relevant to an ASFL. FTX boasted having 31 financial service licences while highlighting conformity with international financial frameworks during the conference.

The March conference came to a close with guarantees from FTX that they will cooperate with authorities [on combating cryptocurrency scams] and further support Australian police investigations into cryptocurrency-related criminality.

The ASIC issued a “S912C Notice” in April to gain access to information and documents necessary for complying with ASFL license requirements. ASIC notified FTX three times during the following six months. In addition, two emails with the subject line “FTX Australia Pty LTD - Summary of Current Concerns” were circulated before to the exchange crash. FTX boasted during the conference that it complied with 31 different financial service licenses, highlighting conformity with global financial frameworks.

At the conclusion of the March meeting, FTX gave guarantees that they would cooperate with authorities [on battling cryptocurrency frauds] and further support Australian police investigations into cryptocurrency-related criminality. The ASIC published a “S912C Notice” in April to gain access to records and information necessary for meeting ASFL license requirements. ASIC sent FTX 3 alerts during the course of the following six months. In the days before the exchange crash, two emails with the subject line “FTX Australia Pty LTD - Summary of Current Concerns” were circulated.

Australian regulators' probe into FTX is engulfed in tough questions.

The information concerning the ASIC probe raises a lot of questions. In particular, might regulatory agencies have taken action earlier or done more than that to safeguard the deposits of Australian investors？

Global regulators are under pressure to regulate cryptocurrencies as a result of the FTX fiasco. Following this study, Australian lawmakers are likely to move on with their plans to implement a set of regulations for cryptocurrencies this year. But where did FTX receive the ASFL in the first place that they utilized to restore investor confidence？

The missing crucial papers that first piqued ASIC's interest in FTX are where the solution is located at the investigation's beginning. Since these documents didn't exist, ASIC was unable to locate them. Through the purchase of IFS Markets, FTX was able to obtain the ASFL license (an online FX trading platform). IFS itself bought a company called Forex Financial Services in order to purchase the ASFL.

Alameda (FTX's sibling company) took similar actions to use banking facilities and accept AUD deposits. Alameda paid $300,000 AUD in 2020 to acquire OTC transaction business HiveEx (which also ran the HiveSpend payment processor).

As component of its aspirations to establish Australia's first crypto bank, HiveEx owned a share in the Australian bank Goldfield's Money. Alameda was enabled to make it possible for consumers to deposit AUD using FTX and name Sam Bankman-Fried as Director thanks to HiveEx. However, users noticed a change in the PAYID in May 2022 (after the ASIC probe began), indicating HiveEx would be no longer in use from this point forward.

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