AUSSIE REGULATOR FLAGGED CONCERNS ABOUT FTX MONTHS BEFORE COLLAPSE: REPORT

Last updated: June 19, 2025, 21:21 | Written by: Elizabeth Rossiello

The catastrophic collapse of the FTX crypto exchange sent shockwaves throughout the entire cryptocurrency market, wiping out billions in value and leaving countless investors reeling.However, new reports reveal that the signs of trouble at FTX were apparent well before the final implosion. FTX was surveilled by Australian financial regulators as early as March 2025, per the Guardian. Almost 30,000 investors in Australia lost money to Sam Bankman-Fried's crypto exchange, reports say.Specifically, the Australian Securities and Investments Commission (ASIC), the country's financial regulator, had already raised serious concerns about FTX's Australian operations months before the exchange ultimately crumbled.This revelation, based on documents obtained by *The Guardian Australia* through a freedom of information request, paints a picture of a regulator diligently monitoring a situation that was rapidly spiraling out of control.The ASIC's early scrutiny and subsequent surveillance raise critical questions about the oversight of crypto exchanges and the protection of investors in this volatile market.Almost 30,000 Australian investors are said to have lost money due to the fall of Sam Bankman-Fried's crypto empire. FTX had already set off alarm bells with Australia s financial regulator several months before the crypto exchange s catastrophic collapse, according to a report. The Australian Securities and Investments Commission (ASIC) first began looking into the company s local operations in March 2025, according to documents revealed through a freedom of information request by The Guardian Australia.Understanding the timeline of these events and the specific concerns raised by ASIC is crucial for learning valuable lessons and preventing similar disasters in the future. Australia s financial regulator raised concerns about FTX Australia not long after it began operations in March 2025, according to documents. Australia s financial regulator reportedly raised concerns over FTX s local Australian subsidiary as much as eight months before the exchange met its untimely end in November.This article will delve into the details of ASIC's investigation, the timeline of events, and the broader implications for crypto regulation in Australia and beyond.

Early Warning Signs: ASIC's Initial Scrutiny of FTX Australia

According to the unearthed documents, ASIC's concerns regarding FTX Australia surfaced shortly after the exchange began operating in the country in March 2025.This relatively swift response indicates a proactive approach by the regulator, suggesting that potential red flags were identified early on. A briefing document obtained by the Guardian also confirmed that in the months between ASIC's initial concerns and FTX collapsing on Nov. 11, the regulator put the exchange under surveillanceThe exact nature of these initial concerns remains somewhat vague in the available reports, but they were significant enough to warrant further investigation and surveillance.It’s important to remember that FTX acquired its Australian Financial Services Licence (AFSL) by acquiring the financial institution IFS Markets.The ASIC report suggests that this acquisition, intended to allow FTX to legally operate in Australia, was not without its own set of potential issues that merited immediate investigation.

What Triggered ASIC's Investigation?

While the specifics of the initial triggers are not fully detailed, it's likely that ASIC was looking at several key areas:

Compliance with Australian Financial Regulations: Ensuring that FTX Australia was adhering to all relevant laws and regulations regarding financial services.
Customer Protection: Assessing the measures in place to protect Australian investors from potential risks associated with cryptocurrency trading.
Financial Stability: Evaluating the financial health and stability of FTX Australia to ensure it could meet its obligations to customers.
Transparency and Disclosure: Examining the clarity and accuracy of information provided to Australian users regarding the risks and rewards of using the FTX platform.

It's also highly probable that ASIC was monitoring public sentiment and reports circulating within the Australian financial news landscape.An article in the *Australian Financial Review* is noted as prompting the Report.These types of media triggers can often prompt regulators to act.

ASIC's Surveillance and Continued Concerns

Following the initial identification of potential issues, ASIC placed FTX Australia under surveillance. Report revealed that the Australian regulator continued to flag concerns regarding FTX s license and issued multiple notices to provide transparent documents. The behemoth crypto exchange s collapse has delivered shockwaves all over the crypto space, plunging the global market cap from $1 trillion.This meant closely monitoring the exchange's activities, including trading volumes, customer complaints, and compliance with regulatory requirements.The timeframe of this surveillance is critical. A new report shows that the fallen crypto exchange FTX had already caused concerns with the Australian regulator months before its collapse. According to a document on The Guardian Australia's website, the ASIC (Australian Securities and Investments Commission) started investigating the firm's local operation last March. An article in the Australian Financial Review prompted theReports indicate that ASIC continued to flag concerns regarding FTX's license and issued multiple notices to provide transparent documents. As per a previous report from Cointelegraph, FTX acquired its Australian financial services license (AFSL) by taking over financial institution IFS Markets in December 2025 before opening up for business months later in March 2025.This active engagement suggests that the regulator wasn't simply passively observing; they were actively seeking information and demanding accountability from FTX.

The Importance of Transparent Documentation

One key aspect of ASIC's concerns centered around the need for transparent documentation.This likely refers to requirements for FTX to provide clear and accurate records of its financial transactions, customer accounts, and operational procedures. Australia s financial regulator reportedly raised concerns over FTX s local Australian subsidiary at least six months before the exchange met its untimely end in November. According Aussie regulator flagged concerns about FTX months before collapse: ReportTransparent documentation is essential for regulators to effectively monitor and assess the risks associated with a financial institution.It allows them to identify potential irregularities, detect fraud, and ensure compliance with regulations. Aussie regulator flagged concerns about FTX months before collapse: Report Satoshi Prime Uncategorized JanuThe fact that ASIC was repeatedly issuing notices for transparent documents suggests that FTX may have been slow or reluctant to provide the necessary information.

The Timeline: From Investigation to Collapse

Understanding the timeline of events is crucial for assessing the effectiveness of ASIC's response and identifying potential areas for improvement. Australia s financial regulator reportedly raised concerns over FTX s local Australian subsidiary as much as eight months before the exchange met its untimelyHere's a breakdown of the key dates:

December 2021: FTX acquires IFS Markets, obtaining an Australian Financial Services Licence (AFSL).
March 2025: FTX Australia begins operations.ASIC commences its investigation shortly thereafter.
Months Leading to November 2025: ASIC places FTX Australia under surveillance and repeatedly raises concerns regarding its operations and transparency.
November 11, 2025: FTX collapses, sending shockwaves through the crypto market.

This timeline reveals that ASIC was actively investigating FTX Australia for a significant period – potentially up to eight months – before the exchange's ultimate downfall. Australia s financial regulator reportedly raised concerns over FTX s local Australian subsidiary as long as eight months before the exchange met its untimely end in November.According to documents obtained by Guardian Australia, the Australian Securities and Investments Commission (ASIC) was conceThis raises the question: could more have been done to prevent the collapse and protect Australian investors?

The Impact on Australian Investors

The collapse of FTX has had a devastating impact on Australian investors, with reports suggesting that almost 30,000 individuals lost money as a result.These losses represent not only financial hardship but also a significant erosion of trust in the cryptocurrency market. Australia s financial regulator reportedly raised concerns over FTX s local Australian subsidiary as much as eight months before the exchange met its untimely end in November. According to documentsThe stories of ordinary Australians who invested their savings in FTX, lured by the promise of high returns, are heartbreaking.Many of these individuals were likely unaware of the underlying risks and the potential for the exchange to collapse.This underscores the importance of investor education and the need for clear and accurate information about the risks associated with cryptocurrency investments. FTX had already set off alarm bells with Australia s financial regulator several months before the crypto exchange s catastrophic collapse, according to a report. The Australian Securities andThe sheer magnitude of Australian investors affected highlights the urgency of having strong regulatory oversight of the crypto market.

What recourse do Australian investors have?

The avenues for recourse for Australian investors who lost money in the FTX collapse are limited and complex.Some potential options include:

Joining class action lawsuits: Several law firms are investigating potential class action lawsuits against FTX and its executives.Joining such a lawsuit could provide a means to recover some of the lost funds.
Filing a claim with the FTX bankruptcy proceedings: Investors can file a claim in the FTX bankruptcy proceedings in the hope of recovering some of their assets.However, the process is likely to be lengthy and the amount of recovery uncertain.
Seeking legal advice: Consulting with a lawyer specializing in financial law and cryptocurrency can help investors understand their legal rights and options.
Reporting the loss to the Australian Taxation Office (ATO): Investors may be able to claim a capital loss on their tax return for the amount of money lost in the FTX collapse.

Broader Implications for Crypto Regulation in Australia

The FTX saga has significant implications for the future of cryptocurrency regulation in Australia.It highlights the need for a more robust and comprehensive regulatory framework to protect investors and ensure the stability of the market.The current regulatory landscape for cryptocurrencies in Australia is still evolving, and there are gaps in the existing laws.The FTX collapse has exposed these vulnerabilities and underscored the urgency of addressing them.

What Changes are Needed?

Several key changes are needed to strengthen crypto regulation in Australia:

Clear Regulatory Framework: Establishing a clear and comprehensive regulatory framework that covers all aspects of the cryptocurrency market, including exchanges, brokers, and other service providers.
Enhanced Investor Protection: Implementing stronger investor protection measures, such as mandatory disclosure requirements, suitability assessments, and dispute resolution mechanisms.
Increased Scrutiny of Crypto Exchanges: Enhancing the oversight and supervision of cryptocurrency exchanges, including regular audits, stress tests, and compliance checks.
International Cooperation: Strengthening international cooperation to address cross-border issues related to cryptocurrency regulation and enforcement.
Mandatory Licensing Requirements: Requiring all cryptocurrency exchanges and service providers to obtain a license to operate in Australia.This would allow ASIC to more effectively monitor and regulate the industry.
Capital Adequacy Requirements: Implementing capital adequacy requirements for cryptocurrency exchanges to ensure they have sufficient funds to meet their obligations to customers.

The Importance of Investor Education

One of the key lessons from the FTX collapse is the importance of investor education.Many investors who lost money in FTX were likely unaware of the underlying risks and the complexities of the cryptocurrency market.It is essential to educate investors about the risks associated with cryptocurrency investments, including volatility, fraud, and regulatory uncertainty.This education should cover topics such as:

Understanding Cryptocurrencies: Explaining what cryptocurrencies are, how they work, and the different types of cryptocurrencies available.
Assessing Risk: Teaching investors how to assess their risk tolerance and choose investments that are appropriate for their individual circumstances.
Spotting Scams: Providing guidance on how to identify and avoid cryptocurrency scams and fraudulent schemes.
Diversification: Emphasizing the importance of diversifying investments to reduce risk.
Seeking Professional Advice: Encouraging investors to seek professional financial advice before investing in cryptocurrencies.

Could ASIC Have Done More?

The question of whether ASIC could have done more to prevent the FTX collapse is a complex one.On one hand, the regulator did identify concerns early on and placed FTX Australia under surveillance.They also issued multiple notices for transparent documentation.On the other hand, the fact that the collapse still occurred suggests that the existing regulatory framework may not have been sufficient to effectively address the risks posed by FTX.It’s worth mentioning that regulatory bodies often face constraints in resources, and political pressures can influence the scope of action they take against large firms.Furthermore, the relative novelty of cryptocurrency and blockchain technology often makes it difficult for regulators to develop effective policies and enforce them quickly enough to prevent harm.

Challenges Faced by Regulators

Regulators face several challenges when it comes to overseeing the cryptocurrency market:

Rapid Innovation: The cryptocurrency market is constantly evolving, with new technologies and products emerging at a rapid pace.This makes it difficult for regulators to keep up and develop appropriate regulations.
Global Nature: Cryptocurrencies operate globally, making it difficult to enforce regulations and address cross-border issues.
Lack of Expertise: Regulators may lack the technical expertise needed to fully understand the complexities of the cryptocurrency market.
Limited Resources: Regulators may have limited resources to effectively monitor and supervise the cryptocurrency market.

Conclusion: Key Takeaways and the Path Forward

The FTX collapse serves as a stark reminder of the risks associated with cryptocurrency investments and the importance of strong regulatory oversight.The fact that ASIC flagged concerns about FTX Australia months before the exchange's downfall highlights the need for proactive and vigilant regulation.While ASIC did take steps to monitor FTX, the existing regulatory framework may not have been sufficient to prevent the collapse and protect Australian investors.Moving forward, it is essential to strengthen crypto regulation in Australia by establishing a clear regulatory framework, enhancing investor protection measures, increasing scrutiny of crypto exchanges, and promoting investor education.Only then can we hope to prevent similar disasters from occurring in the future and ensure the long-term stability and integrity of the cryptocurrency market.The failure of FTX is a potent signal that regulations must keep up with innovation to maintain investor trust.The *lesson* learned is that early warning signs should never be ignored, and regulators must be empowered to take decisive action to protect investors.Australia, and other countries, must adapt to the decentralized world of cryptocurrency to protect their citizens.Ignoring the risks is no longer an option.