Lev Radin/Pacific Press/LightRocket via Getty Images
- FTX was surveilled by Australian financial regulators as early as March 2022, per the Guardian.
- Almost 30,000 investors in Australia lost money to Sam Bankman-Fried's crypto exchange, reports say.
- FTX Australia obtained a regulatory license after acquiring a company that already had one.
FTX was being watched by Australian regulators for almost eight months before the crypto exchange's collapse last November, The Guardian reported.
The crypto exchange cofounded by Sam Bankman-Fried was under "surveillance activity" as early as March 2022, according to documents from November 2022 that The Guardian obtained through freedom of information laws.
The newspaper reports that staff at the Australian Securities and Investment Commission began expressing concerns after Bankman-Fried hyped up FTX's launch in the country in a March 2022 article in the Australian Financial Review.
That article reported that the crypto exchange would lend customers as much as 20 times their investment to buy crypto assets.
Bankman-Fried has pleaded not guilty to eight criminal charges related to fraud and money laundering, which could see him face up to 115 years in prison. After CoinDesk reported on close connections between Bankman-Fried's FTX and his hedge fund, Alameda, customers rushed to withdraw their money, and the firm declared bankruptcy.
Bankman-Fried then told Bloomberg he "misaccounted" $8 billion of customers' money by counting it twice. Lawyers handling FTX's collapse recently told the Delaware bankruptcy court that SBF had instructed his cofounder to insert a special code that allowed Alameda a $65 billion 'backdoor' line of credit to draw on customer funds.
Almost 30,000 investors in Australia lost money to the crypto exchange, the Australian Financial Review previously reported.
Crypto is not currently regulated in Australia, but FTX operated there with a financial services license, which it obtained by taking over a company that was already licensed. Its license was then suspended five days after FTX filed for bankruptcy, the regulator said.
In April 2022, ASIC asked FTX for information as part of its efforts to decide whether the crypto exchange should be allowed to hold a financial services license, the Guardian reported.
ASIC did not immediately respond to Insider's request for comment, sent outside normal working hours.
The regulator confirmed to the Guardian that it had made inquiries with FTX Australia since March 2022, and investigations were ongoing.