Australian securities regulators were investigating FTX as early as March 2022, according to emails obtained by The Guardian.
The investigation looks to have begun after it became clear that FTX was offering 20 times leverage on its investments. When regulators began to investigate, they discovered that FTX had acquired its license from a takeover of IFS Markets, which had itself acquired it by taking over Forex Financial Services.
In order to understand whether or not FTX was maintaining the standards required by the license, regulators issued an S912C notice to gather information to assess its compliance.
The emails reviewed by The Guardian seem to confirm that the investigation was ongoing at the time of the collapse, with a document dated November 11 confirming the exchange was being surveilled by the regulator.
FTX and Alameda Research had used other acquisitions to help manage their activities in Australia. Alameda had purchased the small over-the-counter (OTC) trading desk HiveEx in order to provide banking for FTX customers.
The recent creditor matrix filed in the ongoing FTX bankruptcy, which includes entities who may not be creditors, includes HiveEx, Goldfield’s Money, and the Australian Attorney General’s Office.
Sam Bankman-Fried, director of HiveEx, and founder and largest shareholder of Alameda Research and FTX has pled not guilty to all eight criminal charges brought against him by the Southern District of New York. Other executives, including Caroline Ellison and Gary Wang, have pled guilty to similar charges.