FTX did not convince the ASIC of its operations. New details show that the exchange had been served 3 notices in eight months. The surfaced report claims that the ASIC had warned about the exchange in March, the first month it began operations there.

FTX was a huge red flag

The ASIC has been shown to express concerns about the Australian FTX subsidiary eight months before the November collapse. Via documents accessed by Guardian Australia, the regulators were concerned about how the exchange conducted its business there after obtaining an operation license via a company acquisition.

After taking over IFS Markets in December, the exchange acquired the operational license in 2021. However, it only opened for business months later, in March 2022. The ASIC noted red flags in how the exchange operated its newest entity as soon as it began operations there.

The documents obtained by Guardian Australia show that the ASIC issued a section 912C notice to FTX in March, requiring it to provide information about its operations to assess if it was meeting the AFSL license requirements. Such a notice allows the ASIC to monitor the kind of financial services the licensee engages in and determine if the person is fit to hold it.

The report by Guardian Australia confirmed that the ASIC and FTX engaged for several months, with three notices being issued to the exchange in the process. However, the operations of the business remained the same. Reports have it that the ASIC was still concerned by the exchange’s operations till late October.

Is ignorance what’s fanning crypto meltdown fires?

The ASIC had seen the red flags in the operations of the FTX subsidiary in the country but did not take any legal action like bans or fines. The ASIC is not the only regulatory body that has had clashes with FTX

Recently, the CFTC expressed that it was concerned with venture capitalists (VCs) not taking charge of how their money was working in FTX. It said that it would make arrangements to question those VCs and figure out whether they ignored FTX red flags or needed to make an effort to know how their investments were fairing.

FTX is not the only meltdown that shows a great level of ignorance in the crypto space. Other organizations like Terra and crypto lenders like BlockFi and Celsius were never reported before they collapsed. That shows the lender never quite struck deals that allowed them to monitor how their investments were fairing or didn’t even care.

As such, it calls for all stakeholders in the financial sector to be vigilant and more active in streamlining financial vehicles like crypto and stocks. Keep watching FintechExpress for crypto and other finance-related news.