The Cyprus Securities and Exchange Commission has decided to extend the suspension of FTX Europe’s investment firm license until May 30, 2025. This means that the cryptocurrency exchange will not be able to offer its services or accept new clients for an additional six months. This is the fourth time that the Cyprus agency has extended the suspension, which was first put in place on November 11, 2022, around the same time that FTX in the U.S. faced financial difficulties.
During this period of suspension, FTX Europe is prohibited from engaging in investment services or activities, entering into new business transactions, acquiring new clients, or promoting itself as an investment service. However, the Cyprus SEC has granted permission for the firm to complete its existing transactions and return funds and financial instruments to its clients.
The extension of the suspension is intended to give FTX Europe the opportunity to take the necessary steps to comply with the current investment and regulated markets laws. As a result of the suspension, FTX Europe’s website currently does not offer trading options, but users can still access their account balances and request withdrawals.
After FTX declared bankruptcy in November 2022, the Cyprus SEC suspended FTX Europe’s license due to concerns about the suitability of the management team and the protection of client assets. Originally known as Digital Assets AG, FTX Europe was acquired by FTX for $323 million in 2021, leading to the name change.
According to a report by Reuters, FTX’s restructuring team attempted to recoup some of the acquisition costs for FTX Europe, claiming that the purchase price was excessive. Ultimately, the dispute was resolved by selling FTX Europe back to its original founders for $32.7 million, just over 10% of the initial acquisition price.
In 2022, following approval from the Cyprus SEC, FTX Europe established a regional headquarters in Cyprus in addition to its main headquarters in Switzerland. Despite the current challenges faced by the firm, it remains to be seen how FTX Europe will navigate the extended suspension and work towards regulatory compliance in the future.
