Cypriot regulator suspends license of FTX (EU) Ltd
The Cyprus Securities and Exchange Commission (CySEC) announces that the authorisation of the Cyprus Investment Firm FTX (EU) Ltd is suspended in whole, pursuant to section 10(1) of Directive DI87-05 for The Withdrawal and Suspension of Authorisation (‘DI87-05’).
FTX Cyprus
FTX had acquired a CySEC CIF-licensed entity called K-DNA Financial Services Ltd earlier this year, and received permission to operate the ftx.com/eu website for European clients from that company. Effectively, the now-bankrupt crypto exchange FTX had planned to use Cyprus as an EU base, and had already made a number of hires from the Retail FX/CFDs industry.
According to the Cypriot financial regulator, there are suspicions of alleged violations of:
Section 22(1) of the Investment Services and Activities and Regulated Markets Law of 2017 (the ‘Law’) as the Company does not appear to comply at all times with the authorisation conditions:
- in section 9(2)(a) of the Law, in relation to the suitability of the members of the management body, and
- in section 17(9) of the Law, as specified in paragraph 4(1)(f) of the CySEC’s Directive DI87-01 for the Safeguarding of Client Assets, Product Governance Obligations and Inducements, in relation to the organisational requirements for safeguarding the clients’ assets.
The above decision was reached for the protection of the investors and the orderly operation of the market.
Within one month, FTX must take the necessary actions to comply with the aforementioned provisions. While the suspension of the authorisation is in force, as provided for in section 9 of DI87- 05, the company is not permitted to:
- Provide/carry out investment services/activities.
- Enter into any business transaction with any person and accept any new client.
- Advertise itself as a provider of investment services.
FTX (EU) Ltd may complete all its own transactions and those of its clients, in accordance with client instructions. It may also return all funds and financial instruments which are attributable to its clients.
On November 11, 2022, FTX US and a number of its subsidiaries filed for Chapter 11 bankruptcy in Delaware.