A LOOPHOLE ALLOWED FTX TO SECURE ITS AUSSIE LICENSE WITHOUT FULL CHECKS: ASICS LONGO

Last updated: June 19, 2025, 19:28 | Written by: Anthony Pompliano

The shocking collapse of FTX sent shockwaves through the global cryptocurrency market, leaving investors reeling and regulators scrambling to understand what went wrong. ASIC s Joseph Longo pointed the finger at a loophole that allowed FTX to acquire an Australian Financial Services License under its watch. Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC) is calling for a regulatory loophole to be closed that allowed FTX to acquire an Australian Financial ServicesIn Australia, the fallout has prompted a closer look at how FTX managed to acquire an Australian Financial Services License (AFSL) in the first place.Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC), has publicly stated that a regulatory loophole allowed FTX to bypass the standard rigorous checks typically associated with obtaining such a license.This revelation has ignited a debate about the adequacy of existing regulations and the need for urgent reform to protect Australian investors from similar future incidents. A loophole allowed FTX to secure its Aussie license without full checks: ASIC's Longo Brian Quarmby 20 摘要: ASIC's Joseph Longo pointed the finger at a loophole that allowed FTX to acquire an Australian Financial Services License under its watch.The case highlights the complexities of regulating the rapidly evolving crypto space and the challenges of ensuring robust oversight in a decentralized environment. A loophole allowed FTX to secure its Aussie license without full checks: ASIC's LongoIt begs the question: how did this loophole exist, and what steps are being taken to prevent its exploitation by other potentially unscrupulous actors?Longo's call to action emphasizes the imperative of closing this regulatory gap and strengthening the safeguards surrounding the issuance of financial licenses within the Australian market.The consequences of inaction could be devastating, potentially undermining confidence in the entire financial system and exposing investors to unacceptable levels of risk.The implications are vast, demanding immediate and comprehensive attention.

The Regulatory Loophole Exposed by FTX's Australian License Acquisition

ASIC's chairman, Joseph Longo, has been vocal about the specific loophole that enabled FTX to secure its AFSL without undergoing the full suite of necessary checks. ASICs Joseph Longo pointed the finger at a loophole that allowed FTX to acquire an Australian Financial Services License under its watch.The exact nature of the loophole revolves around the acquisition process.Instead of applying for a new license directly, FTX acquired an existing company that already possessed an AFSL. Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC), is calling for a regulatory loophole to be closed that allowed FTX to acquire an Australian FinancialThis acquisition route seemingly bypassed certain stringent due diligence processes that would normally be required for a new license application.This method is not inherently illegal, but the ease with which FTX navigated this process raises serious questions about the effectiveness of current regulatory oversight.The regulatory framework may not have adequately accounted for the complexities and rapid growth of the crypto industry, leaving a gap that FTX was able to exploit.

Acquisition vs.Direct Application: A Critical Distinction

The key difference between applying for a new AFSL and acquiring an existing one lies in the depth of scrutiny applied by ASIC. The Australian Securities and Investments Commission (ASIC) chair Joseph Longo, demonstrated the need to seal regulatory loopholes exploited by the embattled FTX to secure an Australian operating license.When a new entity applies for a license, ASIC conducts a thorough assessment of its financial standing, management team, compliance procedures, and overall business model.This involves extensive documentation, interviews, and independent verification.However, when a company acquires an existing AFSL holder, the focus tends to be more on the change of control and ensuring that the acquiring entity meets the minimum requirements to operate the existing business.The assumption is often that the existing license holder has already undergone the necessary checks and is operating in compliance with regulations.This assumption proved to be dangerously flawed in the case of FTX.

The Risks of Acquiring Existing Licenses

Acquiring an existing license can present several risks, especially in rapidly evolving industries like cryptocurrency. ASIC's Joseph Longo pointed the finger at a loophole that allowed FTX to acquire an Australian Financial Services License under its watch. A loophole allowed FTX to secure its Aussie license without full checks: ASIC's Longo - PANewsFirstly, the acquiring company may not have the same level of expertise or understanding of the regulatory requirements as the original license holder. Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC) is calling for a regulatory loophole to beSecondly, the acquiring company may have different business practices or risk management strategies that are not aligned with the existing license conditions. A loophole allowed FTX to secure its Aussie license without full checks: ASIC s Longo Decem By News Team Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC) is calling for a regulatory loophole to be closed that allowed FTX to acquire an Australian Financial Services License (AFSL) in theFinally, and perhaps most significantly, the acquiring company may use the existing license as a shortcut to bypass the rigorous scrutiny that would otherwise be required for a new license application.The FTX case serves as a stark reminder of these risks and the need for ASIC to strengthen its oversight of license acquisitions.

ASIC's Response to the FTX Debacle and the Call for Regulatory Reform

Following the collapse of FTX, ASIC has taken swift action to suspend FTX Australia's AFSL. Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC), is calling for a regulatory loophole to be closed that allowed FTX to acquire an Australian Financial Services License (AFSL) in the country without the full suite of checks.According to a Dec. 5 report fromThis measure effectively prevents FTX from providing financial services in Australia while the investigation into its operations continues. Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC), is calling for a regulatory loophole to be closed that allowed FTX to acquire an Australian Financial Services License (AFSL) in the country without the full suite of checks.More importantly, ASIC is actively pushing for regulatory reforms to close the loophole that allowed FTX to acquire its license without full checks.Joseph Longo has emphasized the need for a more comprehensive and proactive approach to regulating the crypto industry, including enhanced due diligence requirements for license acquisitions and greater powers for ASIC to intervene in cases of potential misconduct.

Suspension of FTX Australia's AFSL: Preventing further operation under the current flawed license.
Advocating for Regulatory Reforms: Addressing the underlying loophole exploited by FTX.
Enhanced Due Diligence: Implementing stricter checks for license acquisitions.
Increased Intervention Powers: Granting ASIC greater authority to address potential misconduct.

The proposed reforms aim to ensure that all entities operating in the Australian financial services market, regardless of whether they obtained their license through direct application or acquisition, are subject to the same level of scrutiny and accountability. Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC) is calling for a regulatory loophole to be closed that allowed FTXThis will help to protect Australian investors from the risks associated with unregulated or poorly regulated crypto platforms.

What Specific Reforms are Being Considered?

While the details of the proposed regulatory reforms are still being finalized, several key areas are likely to be addressed:

Enhanced Due Diligence for License Acquisitions: Requiring acquiring companies to undergo a similar level of scrutiny as new license applicants, including independent verification of their financial standing, management team, and compliance procedures.
Strengthened Change of Control Provisions: Implementing stricter rules governing the transfer of AFSLs, including mandatory reporting requirements and ASIC approval for significant changes in ownership or control.
Increased ASIC Powers to Intervene: Granting ASIC greater authority to investigate and take enforcement action against companies that are found to be in breach of their license conditions or engaging in misconduct, even if they obtained their license through acquisition.
Specific Crypto Regulations: Developing a tailored regulatory framework for the crypto industry that addresses the unique risks and challenges associated with digital assets, including requirements for custody, cybersecurity, and consumer protection.

These reforms represent a significant step towards strengthening the regulatory framework for financial services in Australia and ensuring that all entities operating in the market are held to the highest standards of accountability and transparency. A loophole allowed FTX to secure its Aussie license without full checks: ASIC's Longo 3:06 AM United States News NewsThe goal is to create a level playing field and protect Australian investors from the risks associated with unregulated or poorly regulated crypto platforms.

The Broader Implications for Crypto Regulation Globally

The FTX debacle and the subsequent exposure of regulatory loopholes in Australia have broader implications for crypto regulation globally. Joseph Longo, the chairman of the Australian Securities and Investments Commission (ASIC) is calling for a regulatory loophole to be closed that allowed FTX to acquire an Australian Financial Services License (AFSL) in the country without the full suite of checks.It highlights the need for international cooperation and coordination in regulating the crypto industry, as digital assets can easily cross borders and circumvent national regulations.It also underscores the importance of adopting a risk-based approach to regulation, focusing on the activities and entities that pose the greatest risk to investors and the financial system. FTSE 100, DAX 40 and Nasdaq 100 Regain Ap. News . What are crypto exit scams, and how to ApThe lessons learned from the FTX case can inform the development of more effective and comprehensive regulatory frameworks in other jurisdictions, helping to prevent similar incidents from occurring in the future.

The Need for International Cooperation

The global nature of the cryptocurrency market necessitates international cooperation among regulatory bodies.Without a coordinated approach, companies can easily exploit regulatory arbitrage by operating in jurisdictions with weaker rules.Sharing information, coordinating enforcement actions, and developing common regulatory standards are crucial for effectively regulating the crypto industry and protecting investors worldwide.Organizations like the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) are playing a key role in facilitating international cooperation in this area.

Adopting a Risk-Based Approach

A risk-based approach to regulation involves focusing on the activities and entities that pose the greatest risk to investors and the financial system.This means prioritizing regulatory oversight of areas such as stablecoins, decentralized finance (DeFi), and crypto exchanges, where the potential for fraud, manipulation, and systemic risk is higher.It also involves tailoring regulatory requirements to the specific risks associated with different types of crypto assets and activities.A risk-based approach allows regulators to allocate their resources more effectively and focus on the areas where they can have the greatest impact.

Protecting Yourself as a Crypto Investor

While regulators are working to strengthen the regulatory framework for the crypto industry, it is essential for investors to take steps to protect themselves.This includes conducting thorough research before investing in any crypto asset, understanding the risks involved, and diversifying their portfolio to reduce their exposure to any single asset or platform.Investors should also be wary of promises of high returns and avoid investing in anything they don't fully understand.Remember the basic principles of investment: if it sounds too good to be true, it probably is.Always seek professional financial advice before making any investment decisions.

Do Your Research: Understand the technology, team, and potential risks of any crypto project before investing.
Understand the Risks: Cryptocurrency is highly volatile and speculative.Be prepared to lose your entire investment.
Diversify Your Portfolio: Don't put all your eggs in one basket.Spread your investments across different assets and platforms.
Be Wary of High Returns: Promises of guaranteed or exceptionally high returns are often scams.
Seek Professional Advice: Consult with a qualified financial advisor before making any investment decisions.

The Future of Crypto Regulation in Australia and Beyond

The FTX collapse has served as a wake-up call for regulators around the world, highlighting the need for a more comprehensive and proactive approach to regulating the crypto industry.In Australia, ASIC's response to the FTX debacle, including its call for regulatory reform and its efforts to close the loophole that allowed FTX to acquire its AFSL without full checks, is a positive step towards strengthening the regulatory framework and protecting Australian investors.The future of crypto regulation will likely involve a combination of stricter licensing requirements, enhanced due diligence, greater regulatory oversight, and international cooperation.The goal is to create a safe and sustainable environment for the crypto industry to thrive, while protecting investors from the risks associated with unregulated or poorly regulated platforms.The challenge lies in striking the right balance between fostering innovation and protecting consumers.

Frequently Asked Questions (FAQs)

Why did ASIC allow FTX to get an Australian Financial Services License?

ASIC did not directly grant FTX a new license.FTX acquired an existing company that already possessed an AFSL.This acquisition, unfortunately, bypassed certain stringent checks that would be applied to a new license application, exploiting a regulatory loophole.Joseph Longo, ASIC's chairman, has acknowledged this and is pushing for reforms to prevent similar situations in the future.

What is an Australian Financial Services License (AFSL)?

An AFSL is a license required for businesses providing financial services in Australia.These services include providing financial advice, dealing in financial products, and managing investment schemes.Holding an AFSL signifies that the company has met certain regulatory requirements and is authorized to operate in the Australian financial market.

What is ASIC doing to prevent similar situations in the future?

ASIC is actively pursuing regulatory reforms to close the loophole that FTX exploited.These reforms include enhanced due diligence for license acquisitions, strengthened change of control provisions, increased ASIC powers to intervene in cases of misconduct, and the development of specific crypto regulations tailored to address the unique risks and challenges associated with digital assets.Essentially, Joseph Longo is spearheading the charge for a more robust regulatory framework.

How will these regulatory changes affect crypto investors in Australia?

The regulatory changes are intended to provide greater protection for crypto investors in Australia.By strengthening the regulatory framework, ASIC aims to reduce the risk of fraud, manipulation, and systemic risk in the crypto industry.This will create a safer and more sustainable environment for crypto investing, but investors should still exercise caution and conduct their own research before investing in any digital asset.

What can I do as a crypto investor to protect myself?

Even with stronger regulations, it's crucial for crypto investors to take personal responsibility for their investments.Conduct thorough research on any crypto asset before investing, understand the risks involved, diversify your portfolio, be wary of promises of high returns, and seek professional financial advice if needed.Remember, the crypto market is inherently volatile, so only invest what you can afford to lose.

Conclusion: Closing the Gap and Strengthening Crypto Regulation

The FTX saga has exposed a critical weakness in Australia's financial regulatory system: a loophole that allowed the exchange to secure an operating license without undergoing the necessary rigorous checks.ASIC's chairman, Joseph Longo, has rightfully identified this deficiency and is advocating for immediate and comprehensive regulatory reform.Closing this loophole is paramount to safeguarding Australian investors and maintaining confidence in the financial system.The proposed reforms, including enhanced due diligence for license acquisitions and greater ASIC intervention powers, represent a significant step in the right direction.However, the challenge lies in effectively balancing innovation with regulation, creating a framework that fosters the growth of the crypto industry while protecting consumers from undue risk.The lessons learned from the FTX debacle must serve as a catalyst for stronger, more robust crypto regulation, not just in Australia, but globally.The future of digital finance depends on it.Don't be afraid to seek advice from financial advisors.