FTX EU’s license will remain suspended until March 2023, says CySEC

Following the collapse of the main FTX exchange, based in the Bahamas, the platform’s subsidiaries in different areas of the world got their licenses suspended for a certain amount of time. Some of the most notable jurisdictions include Australia, Japan, as well as EU. For the latter, FTX obtained a license from CySEC, the Cyprus Securities and Exchange Commission.

However, like the others, CySEC decided to suspense it, and now, it announced that it will prolong that suspension until the end of March 2023.

CySEC suspends FTX EU’s license to protect investors and the markets

CySEC said in a statement that the decision to prolong the suspension was reached on Monday, December 19th. By extending it, the regulator will allow the subsidiary additional time to continue with all the necessary actions required to comply with the relevant provisions of the Investment Services and Activities and Regulated Markets Law of 2017.

The extension arrived about one month after the Cyprus-based regulator originally suspended FTX EU’s license due to alleged violations of certain parts of the market law. Some of the problems that are deemed critical by the regulator include having unsuitable individuals within the management board, failing to meet the requirements for safeguarding the clients’ assets, and alike.

CySEC further added that the decision was made with investors in mind, as the regulator’s primary concerns include the protection of the platform’s users, as well as ensuring that the market operations remain orderly. Until such things can be ensured, FTX EU remains too risky to be allowed to operate.

Initially, CySEC gave the platform one month to get these affairs in order and reach the desired criteria in terms of quality, safety, and transparency. However, since it failed to do so, the regulator has decided to extend the suspension of its license.

FTX EU is not allowed to operate or even advertise itself

Interestingly, CySEC suspended the platform’s license for the first time only two months after issuing it. At the time, the platform was believed to be fully regulatory compliant, with safe and reliable services on offer, just like the main FTX branch from the Bahamas.

In the new statement, however, CySEC noted that FTX EU is not permitted to offer investment services, enter into business transactions with any person or entity, nor accept new clients. In fact, it is not even allowed to advertise itself as a provider of investment services while its license is suspended.

It was only allowed to complete all of its own transactions, as well as those of its clients, in accordance with client instructions. The company is also allowed to return the funds to the clients if it has any in its possession.

At the moment, the former CEO of FTX, Sam Bankman-Fried, is facing criminal charges. Meanwhile, most companies tied to FTX are under investigation, which includes over 130 firms. As for subsidiaries like FTX EU, all of them have had their licenses suspended, with Japan extending its suspension of FTX Japan’s license until March 9th, while Australia suspended its own local version of FTX until May 15th, 2023.