FTX EU’s License Postponed by CySEC till September
The Cyprus Securities and Exchange Commission \(CySEC\) has extended the suspension of the license of FTX \(EU\) Ltd, the locally regulated subsidiary of the now-collapsed cryptocurrency exchange. The latest license suspension will last until September 30, 2024. The license of the EU unit of FTX was originally suspended in November 2022 and has been extended multiple times since then.
The license allowed FTX to offer crypto derivatives but not directly trade cryptocurrencies. It was an essential license as it enabled the exchange to provide services within the entire European Economic Area. However, as long as the license remains suspended, the exchange cannot carry out investment services or activities, enter into any business transactions, accept new clients, or advertise itself as a provider of investment services.
FTX and over a hundred of its affiliates filed for bankruptcy in the United States in November 2022. The former CEO of FTX, Sam Bankman-Fried, was convicted of multiple criminal charges and has been sentenced to 25 years in jail. Other top bosses of FTX and its affiliate, Alameda Research, have pleaded guilty to civil and criminal charges and are awaiting sentencing. The collapse of FTX has raised questions about the nature of the relationship between the Chairman of the CFTC, Rostin Behnam, and Bankman-Fried. Senators Elizabeth Warren and Chuck Grassley have demanded a full accounting of their interactions.
While FTX EU is already undergoing bankruptcy proceedings, the extended license suspension by CySEC further restricts the exchange from resuming its activities. The extended suspension underscores the regulatory consequences faced by cryptocurrency exchanges for fraudulent or questionable practices.