ASIC was worried about FTX Australia’s operations after it was granted a license.
The regulator sent a Section 912C notice to FTX in first month of operations.
As early as August, eight months before the exchange’s tragic demise in November, the Australian financial authorities apparently voiced worries about FTX’s local Australian affiliate.
Guardian Australia has received documents showing that the Australian Securities and Investments Commission (ASIC) was worried about FTX Australia’s operations after it was granted a license in the nation through a corporate acquisition.
Section 912C Notice to FTX in First Month
It was previously reported that in December 2021, FTX gained its Australian financial services license (AFSL) by acquiring financial institution IFS Markets, and that it opened for operation in March 2022. According to Joe Longo, the head of the Australian Securities and Investments Commission, FTX Australia was able to avoid the scrutiny normally given to new AFSL licensees because of this.
Moreover, newly released records reveal that in the first month of operation, the regulator sent a Section 912C notice to FTX, requesting that the cryptocurrency exchange provide details about its activities so that ASIC could determine whether or not FTX complied with the terms of AFSL.
In order to evaluate whether or not the licensee passes the “fit and proper person test,” ASIC may use the notice to demand documentation from the licensee detailing the nature of the financial services provided and the nature of the financial services business conducted.
According to a briefing document seen by the Guardian, ASIC placed the exchange under “surveillance activity” and sent a total of three notifications to it in the months between its first concerns and the collapse of FTX on November 11.